Q3 Jenelle Heinke, the owner of Ha'Peppas Pizza is considering a new oven in which to bake the firm's signature disk, veggie pizza. Oven type A can handle 25 pizzas per hour. The fixed costs with oven A are $25,000 and the variable costs are $2.50 per pizza. Oven B is larger and can handle 40 pizzas an hour. The fixed cost associated with oven B is $30,000 and the variable costs are $1.50 per pizza. The pizzas sell for $15 each.

a) What is the break-even point for each oven?

A FC= R= VC= BEP= Pizzas

B FC= R= VC= BEP= Pizzas

b) What is the indifference point between these two ovens?

Indifference point = (FC1-FC2) / (VC2-VC1) Units

c) If the owner expects to sell 4,000 pizzas, which oven should she purchase?

d) If the owner expects to sell 8,000 pizzas, which oven should she purchase?

e) At what volume should Janelle switch ovens if she starts with the lower capacity option?

units