Mr. Calderone started a pizza restaurant in 20X0. For this purpose a building was rented for ($

Question:

Mr. Calderone started a pizza restaurant in 20X0. For this purpose a building was rented for $\$ 400$ per month. Two women were hired to work full time at the restaurant and six college students were hired to work thirty hours per week delivering pizza. An outside accountant was hired for tax and bookkeeping purposes. For this service, Mr. Calderone pays $\$ 300$ per month. The necessary restaurant equipment and delivery cars were purchased with cash. Mr. Calderone has noticed that expenses for utilities and supplies have been rather constant.

Mr. Calderone increased his business between 20X0 and 20X3. Profits have more than doubled since 20X0. Mr. Calderone does not understand why his profits have increased faster than his volume.

A projected income statement for $20 \mathrm{X} 4$ has been prepared by the accountant and is shown below: image text in transcribed

{Required:}
(1) What is the breakeven point in number of pizzas that must be sold?
(2) What is the cash flow breakeven point in number of pizzas that must be sold?
(3) If Mr. Calderone withdraws $\$ 4,800$ for personal use, how much cash will be left from the 20X4 income-producing activities?
(4) Mr. Calderone would like an after-tax net income of $\$ 20,000$. What volume must be reached in number of pizzas to obtain the desired income?
(5) Briefly explain to Mr. Calderone why his profits have increased at a faster rate than his sales.
(6) Briefly explain to Mr. Calderone why his cash flow for $20 \mathrm{X} 4$ will exceed his profits.