Refer to the information for Pizza Pizazz in E6-2.

Required:

1. Calculate Pizza Pizazz s new break-even point under each of the following independent scenarios:

a. Sales price increases by $1.00 per pizza.

b. Fixed costs increase by $500.00 per month.

c. Variable costs decrease by $0.35 per pizza.

d. Sales price decreases by $0.50 per pizza.

2. Refer to the original information presented in E6-2. Assume that Pizza Pizazz sold 400 pizzas last month. Calculate the company’s degree of operating leverage.

3. Using the degree of operating leverage, calculate the impact on profit caused by a 10 percent increase in sales revenue.

Data from E6-2

Pizza Pizazz is a local restaurant. Price and cost information follows:

Transcribed Image Text:

Price per pizza Variable cost per pizza Ingredients Direct labor Overhead (box, etc.) $ 13.00 2.35 1.20 0.20 Fixed cost per month $3,515.00