A. At XYZ Restaurant, which sells only pepperoni pizza, has the cost profile: (Note that variable costs are per pizza] Fixed Costs Variable Costs General $1,500 Flour S0.50 Labor Rent $3,000 Yeast s0.05 Insurance $200 Water $0.01 Advertising $500 Cheese $3.00 Pepperoni $2.00 $5.56 Utitilies $450 Total $5,650| Total Based on the total variable expenses per pizza, we now know that XYZ Restaurant must price its pizzas at $5.56 ($0.50 + $0.05 + $0.01 + $3.00 + $2.00) or higher just to cover those costs. We also know that if the pizzeria charges $10 for the finished product, then it receives $4.44 per pizza to contribute to the fixed costs and ultimately the restaurants overall profits. Question: How many pizzas does XYZ Restaurant need to sell at $10 each to cover all those fixed monthly expenses?
A. At XYZ Restaurant, which sells only pepperoni pizza, has the cost profile: (Note that variable costs are per pizza] Fixed Costs Variable Costs General $1,500 Flour S0.50 Labor Rent $3,000 Yeast s0.05 Insurance $200 Water $0.01 Advertising $500 Cheese $3.00 Pepperoni $2.00 $5.56 Utitilies $450 Total $5,650| Total Based on the total variable expenses per pizza, we now know that XYZ Restaurant must price its pizzas at $5.56 ($0.50 + $0.05 + $0.01 + $3.00 + $2.00) or higher just to cover those costs. We also know that if the pizzeria charges $10 for the finished product, then it receives $4.44 per pizza to contribute to the fixed costs and ultimately the restaurants overall profits. Question: How many pizzas does XYZ Restaurant need to sell at $10 each to cover all those fixed monthly expenses?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![A. At XYZ Restaurant, which sells only pepperoni pizza, has the cost profile:
[Note that variable costs are per pizza]
Fixed Costs
Variable Costs
General
$1,500 Flour
$0.50
Labor
Rent
$3,000 Yeast
s0.05
Insurance
$200
Water
$0.01
Advertising $500 Cheese $3.00
$450 Pepperoni $2.00
Utitilies
Total
$5,650 Total
$5.56
Based on the total variable expenses per pizza, we now know that XYZ Restaurant must price its
pizzas at $5.56 ($0.50 + $0.05 + $0.01 + $3.00 + $2.00) or higher just to cover those costs.
We also know that if the pizzeria charges $10 for the finished product, then it receives $4.44 per
pizza to contribute to the fixed costs and ultimately the restaurants overall profits.
Question: How many pizzas does XYZ Restaurant need to sell at $10 each to cover
all those fixed monthly expenses?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F78475f86-aa50-428a-ad29-2822ad8705f2%2F0ff151dc-3cc2-433f-8ee1-7e3119b251d4%2Fvlpuxn7_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A. At XYZ Restaurant, which sells only pepperoni pizza, has the cost profile:
[Note that variable costs are per pizza]
Fixed Costs
Variable Costs
General
$1,500 Flour
$0.50
Labor
Rent
$3,000 Yeast
s0.05
Insurance
$200
Water
$0.01
Advertising $500 Cheese $3.00
$450 Pepperoni $2.00
Utitilies
Total
$5,650 Total
$5.56
Based on the total variable expenses per pizza, we now know that XYZ Restaurant must price its
pizzas at $5.56 ($0.50 + $0.05 + $0.01 + $3.00 + $2.00) or higher just to cover those costs.
We also know that if the pizzeria charges $10 for the finished product, then it receives $4.44 per
pizza to contribute to the fixed costs and ultimately the restaurants overall profits.
Question: How many pizzas does XYZ Restaurant need to sell at $10 each to cover
all those fixed monthly expenses?
Transcribed Image Text:Question: How many pizzas does XYZ Restaurant need to sell at $10 each to cover
all those fixed monthly expenses?
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