Problem 9-19 (Algo) More Than One Cost Driver (LO9-2, LO9-3, LO9-5, LO9-6] Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria's owner has determined that the shop has two major cost drivers-the number of pizzas sold and the number of deliveries made. The pizzeria's cost formulas appear below: Fixed Cost Cost per Pizza $ 4.00 Cost per Delivery per Month Pizza ingredients Kitchen staff Utilities $6,270 $ 790 $ 0.10 Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $2.90 $2.10 $ 810 $ 544 $2,230 $ 910 $ 0.05 In November, the pizzeria budgeted for 2,100 pizzas at an average selling price of $17 per pizza and for 240 deliveries. Data concerning the pizzeria's actual results in November were as follows: Actual Results 2,200 220 Pizzas Deliveries $ 38,130 $ 10,450 $ 6,210 975 638 1,022 544 Revenue Pizza ingredients Kitchen staff Utilities Delivery person Delivery vehicle Equipment depreciation Rent Miscellaneous $ 2,230 898 Required: 1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
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