Question
The local convenience store makes personal pan pizzas. Currently, their oven has a fixed cost of $3000 per month and a variable cost of $0.50
The local convenience store makes personal pan pizzas. Currently, their oven has a fixed cost of $3000 per month and a variable cost of $0.50 per pizza. Pizzas currently sell for $5.00 each. The owner is considering a brick oven. It has a fixed cost of $6000 per month and a variable cost of $0.50 per pizza. Since brick oven cooked pizzas are the latest trend, the owner will be able to charge $6.00 per pizza.
a) If the owner expects to sell 7000 pizzas per month, should she get the new oven? Show your work.
b) For what range of volume of pizzas per month is the brick oven preferred over the current oven?
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