King of Hearts The King of Hearts, a neighborhood pub in a small midwestern town, is owned and operated by Mags Doherty. Since it opened in 2001, annual sales have increased from $200,000 to $500,000. She carries a wide selection of domestic and imported beers. She reports that 55% of her sales are derived from beer, 30 percent from mixed drinks, and the remainder from menu items such as sandwiches, French fries, and potato chips. Many customers have asked Mags to add pizza to her menu. She would have to spend $8,000 for an oven and $4000 for dishes. The ingredients in a typical pizza would cost $10.00 and the additional labor expense per pizza would be $0.80. The utilities involved in preparing each pizza would be $0.20. She would sell a pizza for $21.00. Questions What is her breakeven point in units and dollars? Show your calculations. Assume she sells 100 pizzas a day. How long will it take her to break even? Show your calculations.
King of Hearts The King of Hearts, a neighborhood pub in a small midwestern town, is owned and operated by Mags Doherty. Since it opened in 2001, annual sales have increased from $200,000 to $500,000. She carries a wide selection of domestic and imported beers. She reports that 55% of her sales are derived from beer, 30 percent from mixed drinks, and the remainder from menu items such as sandwiches, French fries, and potato chips. Many customers have asked Mags to add pizza to her menu. She would have to spend $8,000 for an oven and $4000 for dishes. The ingredients in a typical pizza would cost $10.00 and the additional labor expense per pizza would be $0.80. The utilities involved in preparing each pizza would be $0.20. She would sell a pizza for $21.00. Questions What is her breakeven point in units and dollars? Show your calculations. Assume she sells 100 pizzas a day. How long will it take her to break even? Show your calculations.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
King of Hearts
The King of Hearts, a neighborhood pub in a small midwestern town, is owned and operated by Mags
Doherty. Since it opened in 2001, annual sales have increased from $200,000 to $500,000. She carries a
wide selection of domestic and imported beers. She reports that 55% of her sales are derived from beer,
30 percent from mixed drinks, and the remainder from menu items such as sandwiches, French fries,
and potato chips.
Many customers have asked Mags to add pizza to her menu. She would have to spend $8,000 for an
oven and $4000 for dishes. The ingredients in a typical pizza would cost $10.00 and the additional labor
expense per pizza would be $0.80. The utilities involved in preparing each pizza would be $0.20. She
would sell a pizza for $21.00.
Questions
What is her breakeven point in units and dollars? Show your calculations.
The King of Hearts, a neighborhood pub in a small midwestern town, is owned and operated by Mags
Doherty. Since it opened in 2001, annual sales have increased from $200,000 to $500,000. She carries a
wide selection of domestic and imported beers. She reports that 55% of her sales are derived from beer,
30 percent from mixed drinks, and the remainder from menu items such as sandwiches, French fries,
and potato chips.
Many customers have asked Mags to add pizza to her menu. She would have to spend $8,000 for an
oven and $4000 for dishes. The ingredients in a typical pizza would cost $10.00 and the additional labor
expense per pizza would be $0.80. The utilities involved in preparing each pizza would be $0.20. She
would sell a pizza for $21.00.
Questions
What is her breakeven point in units and dollars? Show your calculations.
Assume she sells 100 pizzas a day. How long will it take her to break even? Show your calculations.
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