Pie Guys pizzeria is owned and operated by three brothers. Data concerning the pizzeria's monthly revenues and costs appear below (q refers to the number of pizzas served)
|
Formula |
| Revenue |
$14q |
| cost of ingredients |
$3.50q |
| rent |
$2,500 |
| utilities |
$600+ $0.20q |
| wages |
$7,500 |
| miscellaneous |
$300+ $.50q |
Actual results for February appear below. Prepare a flexible budget performance report for the pizzeria for February for 1,200 pizzas.
| revenue |
$17,000 |
| cost of ingredients |
4,150 |
| rent |
2,500 |
| utilities |
908 |
| wages |
7,600 |
| miscellaneous |
850 |
Required:
- prepare a budget for 1,300 pizzas (this is the static budget).
- prepare a budget for 1,200 pizzas (this is the flexible budget).
- Compute the activity variances between the two budgets and revenue/spending variances between the actual data and the flexible budget. Also indicate whether the variance is favorable or unfavorable.