Question

The owner of Marshall Restaurant is disappointed because the restaurant has been averaging 7,500 pizza sales per month, but the restaurant and wait staff can make and serve 10,000 pizzas per month. The variable cost (for example, ingredients) of each pizza is $1.55. Monthly fixed costs (for example, depreciation, property taxes, business license, and manager's salary) are $12,000 per month.
Sales price is $10 per pizza. The owner wants cost information about different volumes so that some operating decisions can be made.

Fill in the following chart to provide the owner with the cost information.

Monthly Pizza Volume 6,000 7,500 10,000
Total fixed costs
Total variable costs
Total costs
Fixed cost per pizza
Variable cost per pizza
Average cost per pizza
Selling price per pizza
Average profit per pizza

Answer 1

Answer:

No of units                6,000            7,500       10,000  

Total fixed cost              $12,000.00   $12,000.00   $12,000.00  

Total variable cost         $9,000.00     $11,250.00   $15,000.00  

Total cost                 $21,000.00   $23,250.00   $27,000.00  

Fixed cost per pizza  $2.00                $1.60   $1.20  

Variable cost per pizza  $1.50                 $1.50   $1.50  

Average cost per pizza  $3.50                $3.10   $2.70