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Could you please help me to solve this exercise, I m very appreciate if you can do it as much details as you can with formulas provided so that I can understand how the numbers come from.

Many thanks
1 of 2 The cost structure of B&M Restaurant, which sells only pepperoni pizza, is the following (all the costs are reported on a monthly basis): Rent Cheese General Labor Pepperoni Flour Insurance Advertising Utilities Yeast Water $3,600 $2,850 $2,800 $1,500 $750 $600 $500 $450 $75 $15 The actual level of production is 1.500 pizzas per month. The average price per pizza is $ 8.5 Required: (1) Is the restaurant operating at a profit or at a loss? Please report the (2) How many pizzas does XYZ Restaurant need to sell at actual price to (3) What is the break-even price for the actual level of production? actual income. cover all those fixed monthly expenses?
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Answer #1

Requirement-1: B&M Restaurant Contribution Margin Income Statement For the Month Ended XXXXX, XXX $12,750 [1,500 pizzas x $8.5] Sales Variable Costs: Cheese Pepperoni Flour Yeast Water Total Variable Costs $2,850 $1,500 $750 $75 $15 $5,190 $7,560 [Ş12,750 - $5,190] Contribution Margin Fixed Costs: Rent General Labor Insurance Advertising Utilities Total Fixed Costs $3,600 $2,800 $600 $500 $450 $7,950 Operating loss $390 [$7,560 - $7,950]Requirement-2: Breakeven point, in pizzas - Fixed costs/ Contribution Margin per pizza Total Fixed Costs Price per pizza of pizzas to be sold to cover fixed monthly expenses 935 I$7,950/$8.50 - 935.29] $7,950 [Ref: Requirement-1] $8.50 [Ref: Workingsl (if rounded off to zero decimal) Requirement-3 $5,190 1,500 [Ref: Requirement-1] Total Variable Costs # of pizzas sold $3.46 [$5,190 1,500] Variable cost per pizza Total Fixed Costs # of pizzas sold $7,950 1,500 [Ref: Requirement-1] $5.30 I$7,950/ 1,500] $8.76 Fixed cost per pizza Breakeven price per pizza if 1,500 pizzas are produced ($3.46 +$5.30)

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