A. At XYZ Restaurant, which sells only pepperoni pizza, has the cost profile: (Note that variable costs are per pizza] Fixed Costs Variable Costs General $1,500 Flour S0.50 Labor Rent $3,000 Yeast s0.05 Insurance $200 Water $0.01 Advertising $500 Cheese $3.00 Pepperoni $2.00 $5.56 Utitilies $450 Total $5,650| Total Based on the total variable expenses per pizza, we now know that XYZ Restaurant must price its pizzas at $5.56 ($0.50 + $0.05 + $0.01 + $3.00 + $2.00) or higher just to cover those costs. We also know that if the pizzeria charges $10 for the finished product, then it receives $4.44 per pizza to contribute to the fixed costs and ultimately the restaurants overall profits. Question: How many pizzas does XYZ Restaurant need to sell at $10 each to cover all those fixed monthly expenses?
A. At XYZ Restaurant, which sells only pepperoni pizza, has the cost profile: (Note that variable costs are per pizza] Fixed Costs Variable Costs General $1,500 Flour S0.50 Labor Rent $3,000 Yeast s0.05 Insurance $200 Water $0.01 Advertising $500 Cheese $3.00 Pepperoni $2.00 $5.56 Utitilies $450 Total $5,650| Total Based on the total variable expenses per pizza, we now know that XYZ Restaurant must price its pizzas at $5.56 ($0.50 + $0.05 + $0.01 + $3.00 + $2.00) or higher just to cover those costs. We also know that if the pizzeria charges $10 for the finished product, then it receives $4.44 per pizza to contribute to the fixed costs and ultimately the restaurants overall profits. Question: How many pizzas does XYZ Restaurant need to sell at $10 each to cover all those fixed monthly expenses?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter19: The Basic Tools Of Finance
Section: Chapter Questions
Problem 4CQQ
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