[kerla04]

1, 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. Data concerning the pizzeria's costs appear below:

Fixed Cost
Per Month Cost per
Pizza Cost per
Delivery
Pizza ingredients $2.2
Kitchen staff $3,520
Utilities $560 $.05
Delivery person $2.0
Delivery vehicle $390 $1.0
Equipment depreciation $219
Rent $1,820
Miscellaneous $800 $1.00

In November, the pizzeria budgeted for 1,290 pizzas at an average selling price of $18 per pizza and for 190 deliveries.
Data concerning the pizzeria's operations in November appear below:

Actual Results
Pizzas 1,460
Deliveries 150
Revenue $18,500
Pizza ingredients $4,185
Kitchen staff $5,360
Utilities $1,000
Delivery person $300
Delivery vehicle $670
Equipment depreciation $219
Rent $1,820
Miscellaneous $1,000

Required:
Prepare a flexible budget performance report that shows both activity variances and revenue and spending variances for the pizzeria for November.


1, Exchange Corp. Is a company that acts as a facilitator in tax-favored real estate swaps. Such swaps, know as 1031 exchanges, permit participants to avoid some or all of the capital gains taxes that would otherwise be due. The bookkeeper for the company has been asked to prepare a report for the company to help its owner/manager analyze performance. The first such report appears below:

Exchange Corp
Analysis of Revenues and Costs
For the Month Ended May 31
Planning Budget
Unit Revenues
And Costs Actual
Unit Revenues
And Costs Variances
Exchanges completed 41 60
Revenue $397 $387 $10 U
Expenses:
Legal and search fees 156 188 32 U
Office expenses 140 105 35 F
Equipment depreciation 15 10.25 4.75 F
Rent 53 36.22 16.78 F
Insurance 5 3.42 1.58 F


Total expense 369 342.89 26.11 F


Net operating income $28 $44.11 $16.11 F



Note that the revenues and costs in the above report are unit revenues and costs. For example, the average office expense is $140 per exchange completed on the planning budget; whereas, the average actual office expense is $105 per exchange completed.

Legal and search fees is a variable cost; office expenses is a mixed cost; and equipment depreciation, rent, and insurance are fixed costs. In the planning budget, the fixed component of office expenses was $4,000.

All of the company's revenues come from fees collected when an exchange is completed.

Required:
Prepare a performance report that would help the owner/manager assess the performance of the company in May.

[JudyKayTee]

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