Tony’s is a Pizzeria located near a local university. The restaurant not only sells two types of pizza: Thin Crust and Deep Dish, but also sells Pasta. Information relating to the three products for the next month follows: Thin Crust Deep Dish Pasta Expected sales (units) 1,000 400 200 Sales price $15 $20 $12 Variable cost $6 $8 $5 The company has monthly fixed costs of $10,000 and a tax rate of 20%. Required: a. Compute the company’s expected profit (net income) for the upcoming fiscal period. b. Compute the company’s sales mix. (Note Solve the normal way c. Assuming a consistent sales mix, how many units of each product type must the company sell to break even?
Tony’s is a Pizzeria located near a local university. The restaurant not only sells two types of pizza: Thin Crust and Deep Dish, but also sells Pasta.
Information relating to the three products for the next month follows:
|
|
Thin Crust |
Deep Dish |
Pasta |
|
Expected sales (units) |
1,000 |
400 |
200 |
|
Sales price |
$15 |
$20 |
$12 |
|
Variable cost |
$6 |
$8 |
$5 |
The company has monthly fixed costs of $10,000 and a tax rate of 20%.
Required:
a. Compute the company’s expected profit (net income) for the upcoming fiscal period.
b. Compute the company’s sales mix. (Note Solve the normal way
c. Assuming a consistent sales mix, how many units of each product type must the company sell to break even?
d.Assuming a consistent sales mix, if the company wishes to earn monthly net income of $25,000, how many units of each product type must be sold?
e. Compute the margin of safety in both dollar and percentage terms.
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