Question
Pizza Heaven sells 2 sized pizzas. Its large pizza sells for $10 each and accounts for 60% of their total sales. Its medium pizza sells
Pizza Heaven sells 2 sized pizzas. Its large pizza sells for $10 each and accounts for 60% of their total sales. Its medium pizza sells for $7 each and its the other 40% of their sales. The variable costs to make the large pizza are $4 each and the variable costs to make the medium pizza are $3 each. If Pizza Heavens total fixed costs are $130,000, how many total pizzas must it sell to breakeven?
13,000 pizzas c. 15,000 pizzas
14,773 pizzas d. 25,000 pizzas
Precision Manufacturing is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit. If this part was manufactured by Precision, the variable costs to make it would be $12 per unit. In addition, $8 of fixed costs would be allocated to each unit. If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity with no change in total fixed costs, what would be the cost increase or decrease from making the part rather than purchasing it?
$90,000 cost decrease c. $90,000 cost increase
$150,000 cost decrease d. $150,000 cost increase
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