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Chapter 9: Flex Budgeting and Variance Analysis Part 2 Pierre Pizza is a gourmet pizza shop in Palm Springs. It offers in store dining as well as take out and free home delivery services. The owner has determined that the shop has 2 major cost drivers - the number of pizzas sold and the number of deliveries made. Data for the cost formulas appear below: Pizza ingredients Kitchen staff Utilities Delivery Rent Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery Fixed cost per month Rent $ $ $ $ $ $ Cost per pizza 0 174 5,220 1,450 540 2,105 1,240 17,420 In May, the restaurant budgeted for 1,200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries. Actual May results appear below: Actual Results: 4,985 5,281 1,938 1,264 Cost per delivery 2,105 $ $ 3.80 0 $ 0.2 $ 0 $ O $ 0 $ O $ 5 Net operating income $ 1,847 Required: Prepare a report showing the restaurant's revenue and spending variances for May. Don't forget to interpret your results.

Chapter 9: Flex Budgeting and Variance Analysis Part 2 Pierre Pizza is a gourmet pizza shop in Palm Springs. It offers in store dining as well as take out and free home delivery services. The owner has determined that the shop has 2 major cost drivers - the number of pizzas sold and the number of deliveries made. Data for the cost formulas appear below: Pizza ingredients Kitchen staff Utilities Delivery Rent Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery Fixed cost per month Rent $ $ $ $ $ $ Cost per pizza 0 174 5,220 1,450 540 2,105 1,240 17,420 In May, the restaurant budgeted for 1,200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries. Actual May results appear below: Actual Results: 4,985 5,281 1,938 1,264 Cost per delivery 2,105 $ $ 3.80 0 $ 0.2 $ 0 $ O $ 0 $ O $ 5 Net operating income $ 1,847 Required: Prepare a report showing the restaurant's revenue and spending variances for May. Don't forget to interpret your results.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Chapter 9: Flex Budgeting and Variance Analysis Part 2 Pierre Pizza is a gourmet pizza shop in Palm Springs. It offers in store dining as well as take out and free home delivery services. The owner has determined that the shop has 2 major cost drivers - the number of pizzas sold and the number of deliveries made. Data for the cost formulas appear below: Pizza ingredients Kitchen staff Utilities Delivery Rent Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery Fixed cost per month Rent $ $ $ $ $ $ Cost per pizza 0 174 5,220 1,450 540 2,105 1,240 17,420 4,985 5,281 In May, the restaurant budgeted for 1,200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries. Actual May results appear below: Actual Results: 1,938 1,264 2,105 Cost per delivery Net operating income $ 1,847 $ $ $ $ 3.80 0 0.2 0 $ $ 0 0 $ 0 $ 5 Required: Prepare a report showing the restaurant's revenue and spending variances for May. Don't forget to interpret your results.
Transcribed Image Text:Chapter 9: Flex Budgeting and Variance Analysis Part 2 Pierre Pizza is a gourmet pizza shop in Palm Springs. It offers in store dining as well as take out and free home delivery services. The owner has determined that the shop has 2 major cost drivers - the number of pizzas sold and the number of deliveries made. Data for the cost formulas appear below: Pizza ingredients Kitchen staff Utilities Delivery Rent Pizzas Deliveries Revenue Pizza ingredients Kitchen staff Utilities Delivery Fixed cost per month Rent $ $ $ $ $ $ Cost per pizza 0 174 5,220 1,450 540 2,105 1,240 17,420 4,985 5,281 In May, the restaurant budgeted for 1,200 pizzas at an average selling price of $13.50 per pizza and for 180 deliveries. Actual May results appear below: Actual Results: 1,938 1,264 2,105 Cost per delivery Net operating income $ 1,847 $ $ $ $ 3.80 0 0.2 0 $ $ 0 0 $ 0 $ 5 Required: Prepare a report showing the restaurant's revenue and spending variances for May. Don't forget to interpret your results.
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