Assume a local gluten-free pizzeria, on Harrison street, reported the following

Question

Assume a local gluten-free pizzeria, on Harrison street, reported the following results for June and July June July Unit Sales 2,500 2,900 Cost of Food Sold $10,000 $10,600 Fixed Cost Wages and Salaries 3,700 4,000 V.C Rent 2,000 2,000 Fixed Cost Depreciation 500 500 Fixed Cost Utilities 1,400 1,500 V.C Supplies 500 580 V.C Total $18,100 $19,180 a. Identify each cost as being fixed, variable or mixed. b. Determine the equation for total operating costs (Fixed + Unit Variable Cost * # of pizzas) c. Predict the total operating costs for 3500 pizzas d. Determine the average costs for 3500 pizzas Assume a local gluten-free pizzeria, on Harrison street, reported the following results for June and July June July Unit Sales 2,500 2,900 Cost of Food Sold $10,000 $10,600 Fixed Cost Wages and Salaries 3,700 4,000 V.C Rent 2,000 2,000 Fixed Cost Depreciation 500 500 Fixed Cost Utilities 1,400 1,500 V.C Supplies 500 580 V.C Total $18,100 $19,180 a. Identify each cost as being fixed, variable or mixed. b. Determine the equation for total operating costs (Fixed + Unit Variable Cost * # of pizzas) c. Predict the total operating costs for 3500 pizzas d. Determine the average costs for 3500 pizzas

Explanation / Answer

a.

b. total operating costs = 2500 + 6*Q

c. total operating costs for 3500 pizza = 2500 + 6*3500

= 2500 + 21000

=23500

d. average costs for 3500 pizza = 23500/3500

=6.71

Cost of Food Sold V.C Wages and Salaries V.C Rent Fixed Cost Depreciation Fixed Cost Utilities V.C Supplies V.C

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