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The Fish

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Garrison 14e Practice Exam – Chapter 9

Print these pages. Answer each of the following questions, explaining your answers or showing your work, and then compare your solutions to those provided at the end of the practice exam.

1. 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 |$12q |
|Cost of ingredients |$3.50q |
|Rent |$2,500 |
|Utilities |$600 + $0.20q |
|Wages |$7,500 |

Part (a) Prepare the pizzeria’s planning budget for February assuming that 1,500 pizzas are served.

Part (b) Assume that 1,600 pizzas were served in February. Prepare a flexible budget for this level of activity.

Part (c) Actual results for February appear below. Prepare a flexible budget performance report for the pizzeria for February.

|Revenue |$18,800 |
|Cost of ingredients |5,200 |
|Rent |2,500 |
|Utilities |928 |
|Wages |7,200 |

2. What are the characteristics of a planning budget?

3. What are the major weaknesses of a static planning budget?

4. What are the characteristics of a flexible budget?

GNB 14e Practice Exam Solutions – Chapter 9

1. Part (a) Solution (Learning Objective 1):

|Pie Guys Pizzeria

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