Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The owner of Staten Island Restaurant is disappointed because the restaurant has been averaging 5,000 pizza sales per month, but the restaurant and wait staff

image text in transcribed

image text in transcribedimage text in transcribed

The owner of Staten Island Restaurant is disappointed because the restaurant has been averaging 5,000 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 $1.20. Monthly fixed costs (for example, depreciation, property taxes, business license, and manager's salary) are $5,000 per month. The owner wants cost information about different volumes so that some operating decisions can be made. Read the requirements. Requirement 1. Use the chart below to provide the owner with the cost information. Then use the completed chart to help you answer the remaining questions. (Enter total variable costs to the nearest dollar. Enter costs per pizza, price per pizza, and profit per pizza to the nearest cent.) Monthly pizza.valume ........ 2,500 5,000 10,000 Total fixed.costs......... Total variable costs Total costs Fixed cost per pizza......... Variable cost per pizza....... Average cost per pizza.......... Selling price per pizza........... $ 5.50 $ 5.50 $ 5.50 Average profit per pizza.......... Selling price per pizza.................. $ 5.50 $ 5.50 $ 5.50 Average profit per pizza.......... Requirement 2. From a cost standpoint, why do companies such as Staten Island Restaurant want to operate near or at full capacity? y costs. The more units they produce, the the Companies want to run at full capacity to better utilize the resources they spend on 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 $5.50 a pizza to $5.00. 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 Monthly profit = 7=1 5,000 pizzas 10,000 pizzas Since the restaurant will generate of the owner should the sales price to Choose from any list or enter any number in the input fields and then continue to the next

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Effect Of The Internal Auditing On Financial Performance

Authors: Shakir Al Ghalayini, Mohammed A. Keshta, Thabet M. Hassan

1st Edition

3656943052, 978-3656943051

More Books

Students also viewed these Accounting questions