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1. Corleone’s Pizza place makes and delivers pizzas. The cost of ingredients (dough, sauce, cheese, toppings,...

1. Corleone’s Pizza place makes and delivers pizzas. The cost of ingredients (dough, sauce, cheese, toppings, box) is $4.00 per pie. Corleone pays his employees $50 per day. He also incurs a fixed cost of $80 per day. Recently he has been producing 60 pies per day using 2 workers. Menu price of pizza is $11. (Show work).

  1. Calculate total variable cost per day
  1. Calculate average variable cost per pie
  1. Calculate the average total cost of a pie
  1. Calculate total revenue per day
  1. Calculate total profit per day
  1. Calculate average profit per pie
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Answer #1

Total Variable Costs = 60*4+2*50 = 340 per day

Average Variable Costs = Total variable costs/output = 340/60 = 5.67

Fixed Costs = 80

Total Cost = Fixed Cost + Variable Cost

= 340 + 80

TC= 420 per day

Average Total Cost = total cost/output = 420/60 = 7

Total Revenue per day = Price*Quantity = 11*60 = 660

Profits = Total Revenue - Total Costs = 660-420 = 240 per day

Profits per pie = 240/60 = 4

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