Linda's pizza has been approached by a local hotel to sell them 70 pizzas per day...
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Linda's pizza has been approached by a local hotel to sell them 70 pizzas per day (the local hotel had a kitchen fire, and it will take a year to rebuild their kitchen). At current sales of 100 pizza per day, Linda makes $3 per pizza, calculated as follows: Selling Price Ingredient costs Kitchen costs Serving costs Profit per pizza Other information: $30 12 12 3 3 Kitchen costs of $12 per pizza include allocated fixed costs of $8 per pizza. Other costs are variable. The kitchen can make an average of 150 pizzas per day. Serving costs would not be applicable to the special order. However, an additional staff person would need to be hired to deliver the pizzas to the hotel at a cost of $100 per day. Required A. What is the minimum price per pizza that Linda would be willing to sell the 70 pizzas? B. What are possible qualitative issues that Linda should consider? Linda's pizza has been approached by a local hotel to sell them 70 pizzas per day (the local hotel had a kitchen fire, and it will take a year to rebuild their kitchen). At current sales of 100 pizza per day, Linda makes $3 per pizza, calculated as follows: Selling Price Ingredient costs Kitchen costs Serving costs Profit per pizza Other information: $30 12 12 3 3 Kitchen costs of $12 per pizza include allocated fixed costs of $8 per pizza. Other costs are variable. The kitchen can make an average of 150 pizzas per day. Serving costs would not be applicable to the special order. However, an additional staff person would need to be hired to deliver the pizzas to the hotel at a cost of $100 per day. Required A. What is the minimum price per pizza that Linda would be willing to sell the 70 pizzas? B. What are possible qualitative issues that Linda should consider?
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A To determine the minimum price per pizza that Linda would be willing to sell the 70 pizzas we need to consider the additional costs associated with ... View the full answer
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
8th edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
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