The owner of Staten Island Restaurant is disappointed because the restaurant has been averaging $7,500$ pizza sales per month, but the restaurant and wait staff can make and serve $10,000$ pizzas per month. The variable cost $($for example, ingredients$)$ of each pizza is $$1\mathrm{.}55.$ Monthly fixed costs $($for example, depreciation, property taxes, business license, and manager's salary$)$ are $$12,000$ per month. The owner wants cost information about different volumes so that some operating decisions can be made.

$($Click the icon to view the chart for Requirement $1.)$

Read the requirements.

Requirement $2.$ From a cost standpoint, why do companies such as Staten Island Restaurant want to operate near or at full capacity?

Companies want to run at full capacity to better utilize the resources they spend on costs. The more units they produce, the the cost per unit.

Requirement $3.$ The owner has been considering ways to increase the sales volume. The owner thinks that $10,000$ pizzas could be sold per month by cutting the selling price per pizza from $$6\mathrm{.}25$ to $$5\mathrm{.}75.$ How much extra profit $($above the current level$)$ would be generated if the selling price were to be decreased? $($Hint: Find the restaurant's current monthly profit and compare it to the restaurant's projected monthly profit at the new sales price and volume.$)$

Identify the profit formula and compute the monthly profit at the current and the new volume.