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Price per Pizza is $10 In addition, Tony projected the following costs corresponding to sales of 4,000 and 6,000 pizzas for this year's November operation:
Price per Pizza is $10
In addition, Tony projected the following costs corresponding to sales of 4,000 and 6,000 pizzas for this year's November operation: Sales Levels Operating Cost Items 4,000 6,000 Dough $1,600 $2,400 Toppings 1,000 1,500 Cheese 2,700 1,800 1,200 Tomatoes 1,800 Energy* 2,500 3,000 3,000 Kitchen personnel Delivery personnel 3,000 1,320 880 Car expenses 2,600 2,900 Facilities* 10,000 10,000 Advertising 4,500 4,500 Total Operating Costs $29,080 $33,120 * These costs are all related to the Kitchen. Although Tony has an office at the store, the costs necessary to run this office are considered negligible (Tony uses this office only a few hours a week). Required 2. Using the November estimated data: a) Classify these costs as product or period costs. For the period costs, indicate whether these are selling expenses or general and administrative expenses. b) Classify these costs as variable, fixed, or mixed. Then, for the variable costs identify the per unit variable cost and write the total cost equation. c) Determine the contribution margin per pizza d) Determine the breakeven sales level (in number of pizzas) e) Determine the sales level (in number of pizzas) that will generate a profit of $9,000 for next NovemberStep by Step Solution
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