The owner of Queens Restaurant is disappointed because the restaurant has been averaging 8,000 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 $1.45. Monthly fixed costs (for example, depreciation, property taxes, business license.and manager's salary) are $10,000 per month. The owner wants cost information about different volumes so that some operating decisions can be made.(Click the icon to view the chart for Requirement 1.)Read the requirements.Requirement 1. Use the chart below to provide the owner with the cost information. Then use the completed chart to help you answer the remaining questions. (Enter total variable costs to the nearest dollar. Enter costs per pizza, price per pizza, and profit per pizza to the nearest cent.)Monthly pizza volume......5,00010,000Total fixed costs.Total variable costsTotal costsFixed cost per pizzaVariable cost per pizzaAverage cost per pizza8,000 pizzas10,000 pizzasSince the restaurant will generatethe volume.6.25 $8,000of6.25 S=8.25Monthly profitthe owner shouldSelling price per pizza......... $Average profit per pizzaRequirement 2. From a cost standpoint, why do companies such as Queens Restaurant want to operate near or at full capacity?Companies want to run at full capacity to better utilize the resources they spend oncosts. The more units they produce, theRequirement 3. The owner has been considering ways to increase the sales volume. The owner thinks that 10.000 pizzas could be sold per month by cutting the selling price per pizza from $6.25 to $5.75. How much extra profit (above the current level) would be generated if the selling price were to be decreased? (Hint: Find the restaurant's current monthlyprofit and compare it to the restaurant's projected monthly profit at the new sales price and volume.)Identify the profit formula and compute the monthly profit at the current and the new volume.the sales price to▼theData table▼cost per unit.Monthly pizza volumeTotal fixed costsTotal variable costsTotal costs...Fixed cost per pizza.Variable cost per pizzaAverage cost per pizzaSelling price per pizza...... $ 6.25 $ 6.25 $ 6.25Average profit per pizza$Print5,000 8,000 10,000$$$Done- X=$

Costing provides valuable insights into costs, profitability, and resource allocation, helping…

The owner of Queens Restaurant is disappointed because the restaurant has been averaging 8.000 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 $1.45. Monthly fixed costs (for example, depreciation, property taxes, business license. and manager's salary) are $10.000 per month. The owner wants cost information about different volumes so that some operating decisions can be made (Click the icon to view the chart for Requirement 1.) Read the requirements Requirement 1. Use the chart below to provide the owner with the cost information. Then use the completed chart to help you answer the remaining questions. (Enter total variable costs to the nearest dollar. Enter costs per pizza, price per pizza, and profit per pizza to the nearest cent) Monthly pizza volume.. 5.000 8.000 10.000 Total fixed costs Total variable costs Total costs Fixed cost per pizza Variable cost per pizza Average cost per pizza 8.000 pizzas 10.000 pizzas Since the restaurant will generate the volume $ 6.25 S 6.25 S of Selling price per pizza. Average profit per pizza Requirement 2. From a cost standpoint, why do companies such as Queens Restaurant want to operate near or at full capacity? Companies want to run at full capacity to better utilize the resources they spend on costs. The more units they produce the Requirement 3. The owner has been considering ways to increase the sales volume. The owner thinks that 10.000 pizzas could be sold per month by cutting the selling price per pizza from $8.25 to $5.75. How much extra profit (above the current level) would be generated if the selling price were to be decreased? (Hint: Find the restaurants current monthly profit and compare it to the restaurant's projected monthly profit at the new sales price and volume.) Identify the profit formula and compute the monthly profit at the current and the new volume. 6.25 Monthly profit the owner should the sales price to the Data table cost per unit Monthly pizza volume Total fixed costs Total variable costs Total costs... Fixed cost per pizza Variable cost per pizza vanadie cost per Average cost per pizza Selling price per pizza. Average profit per pizza 5.000 8.000 10.000 Print $ 6.25 $ 6.25 $ 6.25 Done

The owner of Queens Restaurant is disappointed because the restaurant has been averaging 8.000 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 $1.45. Monthly fixed costs (for example, depreciation, property taxes, business license. and manager's salary) are $10.000 per month. The owner wants cost information about different volumes so that some operating decisions can be made (Click the icon to view the chart for Requirement 1.) Read the requirements Requirement 1. Use the chart below to provide the owner with the cost information. Then use the completed chart to help you answer the remaining questions. (Enter total variable costs to the nearest dollar. Enter costs per pizza, price per pizza, and profit per pizza to the nearest cent) Monthly pizza volume.. 5.000 8.000 10.000 Total fixed costs Total variable costs Total costs Fixed cost per pizza Variable cost per pizza Average cost per pizza 8.000 pizzas 10.000 pizzas Since the restaurant will generate the volume $ 6.25 S 6.25 S of Selling price per pizza. Average profit per pizza Requirement 2. From a cost standpoint, why do companies such as Queens Restaurant want to operate near or at full capacity? Companies want to run at full capacity to better utilize the resources they spend on costs. The more units they produce the Requirement 3. The owner has been considering ways to increase the sales volume. The owner thinks that 10.000 pizzas could be sold per month by cutting the selling price per pizza from $8.25 to $5.75. How much extra profit (above the current level) would be generated if the selling price were to be decreased? (Hint: Find the restaurants current monthly profit and compare it to the restaurant's projected monthly profit at the new sales price and volume.) Identify the profit formula and compute the monthly profit at the current and the new volume. 6.25 Monthly profit the owner should the sales price to the Data table cost per unit Monthly pizza volume Total fixed costs Total variable costs Total costs... Fixed cost per pizza Variable cost per pizza vanadie cost per Average cost per pizza Selling price per pizza. Average profit per pizza 5.000 8.000 10.000 Print $ 6.25 $ 6.25 $ 6.25 Done

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5EB: Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90....

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