Question

A restaurant prepares 200.00 pizza slices and sells them at a rate of $13.00/slice. Expenses for the restaurant include raw material for pizza at $5.00 per slice, $107.00 as monthly rental and $43.00 monthly as insurance. Restaurant is open only for 25 days in a month. Today there was a party at nearby office so the demand for pizza went up to 211.00 slices. Due to lack of availability vendor could not fulfill the demand and analyzed a lost sale as $4.00 per item. How much profit could the restaurant earn today?

Answer 1

Answer:

It  earns $1,550

Explanation:

Sales Price     $  13

Variable Cost $   5  

Contribution   $  8

200 slices x $8 = $1,600

Monthly expenses:

$107 rent + $43 insurance = $150

Divided by 25 days per month: $ 6 daily

Then, 11 extra slices incurs in $4 loss

11 x 4 = 44 loss

Total earnings for the day:

$1,600 - $6 fixed cost - $44 loss = $1,550