The General Store at State University is an auxiliary bookstore located near the dormitories that sells academic supplies, toiletries, sweatshirts andT-shirts, magazines, packaged food items, and canned soft drinks and fruit drinks. The manager of the store has noticed that several pizza deliveryservices near campus make frequent deliveries. The manager is therefore considering selling pizza at the store. She could buy premade frozenpizzas and heat them in an oven. The cost of the oven and freezer would be $27,000. The frozen pizzas cost $3.75 each to buy from a distributorand to prepare (including labor and a box). To be competitive with the local delivery services, the manager believes she should sell the pizzas for$8.95 apiece. The manager needs to write up a proposal for the university's director of auxiliary services. If The General Store sells 20 pizzas per day, how many days would it take to break even?

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 17E
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The General Store at State University is an auxiliary bookstore located near the dormitories that sells academic supplies, toiletries, sweatshirts and
T-shirts, magazines, packaged food items, and canned soft drinks and fruit drinks. The manager of the store has noticed that several pizza delivery
services near campus make frequent deliveries. The manager is therefore considering selling pizza at the store. She could buy premade frozen
pizzas and heat them in an oven. The cost of the oven and freezer would be $27,000. The frozen pizzas cost $3.75 each to buy from a distributor
and to prepare (including labor and a box). To be competitive with the local delivery services, the manager believes she should sell the pizzas for
$8.95 apiece. The manager needs to write up a proposal for the university's director of auxiliary services. If The General Store sells 20 pizzas per day, how many days would it take to break even?

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