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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 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?

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter24: Price-searcher Markets With High Entry Barriers
Section: Chapter Questions
Problem 12CQ
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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?
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?
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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