ces. 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. Data concerning the pizzeria’s costs appear below:
Lucerne pizza is a small neighborhood pizzeria that has a small area for in-store dining as well offering takeout 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. Data concerning the pizzeria’s costs appear below:
Fixed Cost per Month |
Cost per Pizza |
Cost per Delivery |
|
Pizza ingredients ................ |
$5.00 |
||
Kitchen staff ...................... |
$5,800 |
||
Utilities .............................. |
520 |
$.10 |
|
Delivery person .................. |
$2.90 |
||
Delivery vehicle .................. |
680 |
$2.10 |
|
Equipment depreciation ...... |
387 |
||
Rent .................................. |
1,730 |
||
Miscellaneous ..................... |
730 |
$.01 |
In October, the pizzeria budgeted for 2,000 pizzas at an average selling price of $13.00 per pizza and for 190 deliveries.
Data concerning the pizzeria’s operations in October appear below:
Actual Results |
|
Pizzas ..................................... |
2,100 |
Deliveries ................................ |
190 |
Revenue ................................. |
$27,840 |
Pizza ingredients ..................... |
$10,550 |
Kitchen staff ........................... |
$5,740 |
Utilities ................................... |
$855 |
Delivery person ....................... |
$551 |
Delivery vehicle ....................... |
$1,233 |
Equipment depreciation ........... |
$387 |
Rent ....................................... |
$1,730 |
Miscellaneous .......................... |
$743 |
Required:
- Compute the revenue and spending variances for the pizzeria for October.
- Explain the revenue and spending variances.
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