Question
Carla Vista Co. recently opened for business. The owner wants a cost function estimate to help with future planning. The manager feels that last months
Carla Vista Co. recently opened for business. The owner wants a cost function estimate to help with future planning. The manager feels that last months results fairly represent costs over the coming six months. Last month 700 pizzas were sold. From the following information, use account analysis to estimate the firms cost function for pizzas sold.
Wages for part-time help | $2,737 | |
Pizza toppings | 210 | |
Pizza dough | 280 | |
Store rent | 390 | |
Depreciation on furniture and ovens | 75 | |
Napkins, paper plates, cups, and straws | 84 | |
Liability insurance | 99 | |
Advertising | 60 | |
Cleaning supplies | 15 | |
Managers salary | 1,460 | |
Utilities (electricity and telephone) | 105 | |
Soft drink purchases | 434 |
Develop a cost function using the data from the accounting records. (Round variable cost per unit to 2 decimal places, e.g. 15.25.)
Cost function | = | $ | + | $ | Number of pizzas |
Use the cost function to estimate the total costs if 800 pizzas are expected to be sold next month.
Total cost for 800 pizzas | $ |
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