Case Study: Triple P Pizza Pete and Peggy Peterson are planning their retirement. They have always enjoyed cooking and over the years have developed a pizza that has been the talk of their small town. Everyone has told them for years, "You should just stop working and sell pizzas to local residents and groups." They reside in a small town that is located several miles from the nearest town and would have very little competition. As Pete and Peggy transition into retirement they decide to try their luck and start a small take-out pizza shop. They plan to name it Triple P Pizza. They remodeled their garage and Peggy plans to start by using her own kitchen utensils. They estimate their fixed costs will be $5,500. They estimate their cost of goods sold to be $5.55 per pizza. They estimate other costs that will vary with production will be $1.95 per pizza. They think they could sell 50 pizzas a week or 2.600 per year for a selling price of $10.00 per pizza. They have decided to use volume cost analysis to evaluate their plans. Case questions 1. Calculate the breakeven point for Triple P Pizza in dollars and in pizzas. 2. The owners, Pete and Peggy Peterson, have about $10,000 invested in the business. Their desired rate of return on this investment is 10 percent. What volume of business (again, in dollars and in pizzas) must be generated to reach this ROE goal? 3. Pete would like to start a delivery service and hire some part-time labor, which amounts to an increase in variable costs of $0.50/pizza. With no other changes to the base situation, what impact would this have on the business? Show your answer in dollars and in pizzas. Case Study: Triple P Pizza Pete and Peggy Peterson are planning their retirement. They have always enjoyed cooking and over the years have developed a pizza that has been the talk of their small town. Everyone has told them for years, "You should just stop working and sell pizzas to local residents and groups." They reside in a small town that is located several miles from the nearest town and would have very little competition. As Pete and Peggy transition into retirement they decide to try their luck and start a small take-out pizza shop. They plan to name it Triple P Pizza. They remodeled their garage and Peggy plans to start by using her own kitchen utensils. They estimate their fixed costs will be $5,500. They estimate their cost of goods sold to be $5.55 per pizza. They estimate other costs that will vary with production will be $1.95 per pizza. They think they could sell 50 pizzas a week or 2,600 per year for a selling price of $10.00 per pizza. They have decided to use volume-cost analysis to evaluate their plans. Case questions 1. Calculate the breakeven point for Triple P Pizza in dollars and in pizzas. 2. The owners, Pete and Peggy Peterson, have about $10,000 invested in the business. Their desired rate of return on this investment is 10 percent. What volume of business (again, in dollars and in pizzas) must be generated to reach this ROE goal? 3. Pete would like to start a delivery service and hire some part-time labor, which amounts to an increase in variable costs of $0.50/pizza. With no other changes to the base situation, what impact would this have on the business? Show your answer in dollars and in pizzas