Jim owns and operates a pizza franchise that makes and sells made to order deep-dish pizzas,...
Jim owns and operates a pizza franchise that makes and sells made to order deep-dish pizzas, Chicago style. The expected selling price is $14 per pizza. The projected variable cost per pizza is $4. The estimated fixed costs per month are $15,000.
If fixed costs increase by $5,000 and 6,000 pizzas are sold in a given month, determine the Net Income for that month?
Options:
|
$20,000 |
|
|
$40,000 |
|
|
$50,000 |
|
|
$35,000 |
Homework Answers
| Sales (6,000*$14) | $84,000 |
| Variable cost (6,000*$4) | -24,000 |
| Contribution margin | 60,000 |
| Fixed cost | -20,000 |
| Net income | $40,000 |
Hence option $40,000 is correct
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