The Local Convenience Store Makes Personal Pan Pizzas

question 97

Essay

The local convenience store makes personal pan pizzas. Currently, their oven can produce 55 pizzas per hour. It has a fixed cost of $4,000, and a variable cost of $0.31 per pizza. The owner is considering a bigger oven that can make 90 pizzas per hour. It has a fixed cost of $6,200, but a variable cost of $0.20 per pizza.
a. At what quantity do the two ovens have equal costs?
b. If the owner expects to sell 29,000 pizzas, should he get the new oven?

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Definitions:

Potential Sales

The possible future sales achievable in a given market segment or with a certain customer base, often used in forecasting.

Time Invested

The amount of time one dedicates to a particular activity, project, or goal, often with the expectation of future benefits.

Account

An Account typically refers to a record or arrangement by which an organization maintains its relationship with a customer or client, tracking transactions and interactions.

Non-verbal Communication

The process of conveying a message without the use of words, through gestures, facial expressions, and body language.