P2-12: Napoli Pizza

Gino Potestio, owner of Napoli Pizzaria, is evaluating leasing an espresso/cappucino machine. A number of patronshave inquired about espresso and cappuccino bevarage. Napoli currently does not offer these beverages. Gino believes adding these beverages will increase the demand for his pizzas. A good espresso/cappuchino machine can be leased for $300 month. Each espresse/capputino 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/capputino. Gino estimates that the machine will add about $75 of additional profits per month.

Required

A: How many espresso/capuccino beverage must Napoli sell to break even?

B: Gino doesnt want to offer espresso/capuccino beverage unless he makes at least $1,000 per month after taxes including the additional sales of pizzas from adding espresso/capuccino beverage. Napolis income tax rate is 35 percent. How many servings of espresso/capuccino must Gino sell to meet his after tax profit goal?

P2-12: Napoli Pizza

Gino Potestio, owner of Napoli Pizzaria, is evaluating leasing an espresso/cappucino machine. A number of patronshave inquired about espresso and cappuccino bevarage. Napoli currently does not offer these beverages. Gino believes adding these beverages will increase the demand for his pizzas. A good espresso/cappuchino machine can be leased for $300 month. Each espresse/capputino 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/capputino. Gino estimates that the machine will add about $75 of additional profits per month.

Required

A: How many espresso/capuccino beverage must Napoli sell to break even?

B: Gino doesnt want to offer espresso/capuccino beverage unless he makes at least $1,000 per month after taxes including the additional sales of pizzas from adding espresso/capuccino beverage. Napolis income tax rate is 35 percent. How many servings of espresso/capuccino must Gino sell to meet his after tax profit goal?