The management of Rockos Pizzeria is considering a special promotion for the last two weeks of October,

Question:

The management of Rocko’s Pizzeria is considering a special promotion for the last two weeks of October, which is normally a relatively low-demand period. The special promotion would involve selling two medium pizzas for the price of one, plus 1 cent. The medium pizza normally sells for $12.99 and has variable expenses of $4.50. Expected sales volume without the special promotion is 600 medium pizzas per week.
Required:
a. Calculate the total generated by the normal volume of medium pizzas in a week.
b. Calculate the total number of medium pizzas that would have to be sold during the 1-cent sale to generate the same amount of that results from the normal volume.
c. What other factors should management consider in evaluating the pros and cons of the special promotion?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...