Posted by shay on .
As an entrepreneur, there are going to be many decisions that you need to make, such as the price to charge your customers for your goods and services. You have just graduated from college and recently opened a specialty pizza restaurant. Based on surveys conducted in your area, you determine that it is feasible to sell your specialty pizzas for $15. The cost for making the pizzas includes a fixed cost of $55 and a labor cost of $4 per pizza.
a. Establish an equation to determine revenue.
b. Establish an equation to determine total cost.
c. How many pizzas must be sold to break even (i.e., you experience neither a profit nor a loss)? Interpret your result.
revenue = price per pizza * no of pizzas
cost = 55 + 4*no of pizzas
so, for x pizzas,
r = 15x
c = 55+4x
breakeven where r = c
15x = 55+4x
11x = 55
x = 5
so, revenue exceeds cost when more than 5 pizzas are sold.
$55 for ingredients. Wow - that's some pizza!