As the owner of The Pizzeria, you are evaluating leasing an espresso/cappuccino machine. A number of patrons have inquired about espresso and cappuccino beverages. The Pizzeria currently does not offer these beverages. You believe adding these beverages will increase the demand for pizza. A good espresso/cappuccino machine can be leased for $300 month. Each espresso/cappuccino will sell for $3 and the coffee and milk will average $1 per serving. No additional labor cost is needed because the restaurant staff has enough idle time to prepare and serve the espresso/cappuccino. You estimate that the machine will add about $75 of additional pizza profits per month.

Required:

1. Calculate Break Even UNITS of expresso/cappuccino sales. Your work should be prepared in Excel with properly labeled inputs and relevant variables, formulas throughout and a clearly labeled and highlighted solution
2. Target Profit: Your target profit is $1,000 per month after taxes including the additional sales of pizzas from adding espresso/ cappuccino beverages. Your income tax rate is 35 percent. How many UNITS of servings of espresso/cappuccino must be sold to meet your after-tax profit goal? Include this analysis in a separate, labeled section in your spreadsheet.
3. Memo: Prepare a professional memo (in Word) to self as a note to file properly formatted with a memo heading, proper introduction paragraph and closing paragraph explaining the explaining the break-even process, target profit process, and relationship of fixed and variable costs in the cost analysis process. Please create sections/headers as necessary.