Tony’s is a Pizzeria located near a local university. The restaurant not only sells two types of pizza: Thin Crust and Deep Dish, but also sells Pasta. Information relating to the three products for the next month follows: Thin Crust Deep Dish Pasta Expected sales (units) 1,000 400 200 Sales price $15 $20 $12 Variable cost $6 $8 $5 The company has monthly fixed costs of $10,000 and a tax rate of 20%. required a.>Assuming a consistent sales mix, if the company wishes to earn monthly net income of $25,000, how many units of each product type must be sold? b.>Compute the margin of safety in both dollar and percentage terms.

Solution: a) Cost Volume Profit (CVP) Analysis describes how changes in costs, expenses and Volume…

Answered: Tony’s is a Pizzeria located near a…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 13P: Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income...

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Tony’s is a Pizzeria located near a local university. The restaurant not only sells two types of pizza: Thin Crust and Deep Dish, but also sells Pasta.

Information relating to the three products for the next month follows:

	Thin Crust	Deep Dish	Pasta
Expected sales (units)	1,000	400	200
Sales price	$15	$20	$12
Variable cost	$6	$8	$5

The company has monthly fixed costs of $10,000 and a tax rate of 20%.

required

a.>Assuming a consistent sales mix, if the company wishes to earn monthly net income of $25,000, how many units of each product type must be sold?

b.>Compute the margin of safety in both dollar and percentage terms.

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