Determining Break-Even, Target Profit, Margin of Safety
Pizza Pizazz is a local restaurant. Price and cost information follows:
Price per pizza | $ 13.00 | |
Variable cost per pizza | ||
Ingredients | 2.35 | |
Direct labor | 1.20 | |
Overhead (box, etc.) | 0.20 | |
Fixed cost per month | $3,515.00 | |
Required:
1.Determine Pizza Pizazz’s break-even point in units and sales dollars.
2.Determine the restaurant’s margin of safety if it currently sells 450 pizzas per month.
3.Determine the number of pizzas that Pizazz must sell to generate $2,000 in profit.
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