Question

This Pizza Man is a local shop that plans to make all of its sales this Saturday from its sidewalk tables during the town's holiday parade. On this occasion, the shop's owners know that customers will buy by the slice and any kind of pizza offered will sell.

The Pizza Man offers plain, meat, vegetable, and supreme pizza. Each variety has its own requirement for sauce, cheese, dough, and toppings (in ounces), and each has its own selling price.

Is there any type of pizza not made in the final plan? If yes, how should its price be adjusted so that it will be made?

Answer 1

There could be other possible varieties of pizza. Especially Pizza Man could make different forms of pizza base such as deep dish, cheese stuffed, etc.

However, in order to do this, the company will not need to acquire additional ingredients. The current list of ingredients will be sufficient but their quantity will need to be increased. As a result, the cost of goods sold will increase. However, as their pricing can be slightly modified. The most appropriate approach will be to keep same pricing strategy. For example, if fixed margin pricing is applied for other types of pizza, the same should be applied. This way there can be a general way of calculating the selling price and also the costs of the overall operation.