# Shirrell Blackthorn is the accountant for several pizza restaurants based in a tri-city area. The president of

## Question:

Food and wage costs .... $175,000

Delivery costs .......... $18,000

Other costs .......... $9,520

Fixed costs .......... $255,000

Sales revenue .......... $560,000

Delivery mileage in miles ... 8,000

Number of product types .... 14

Required:

1. Calculate the average variable rate for the following costs: food and wages, delivery costs, and other costs.

2. Form an equation for total cost based on the fixed costs and your results from Requirement 1.

3. The president is considering expanding the restaurant menu and plans to add one new offering to the menu. According to the cost equation, what is the additional monthly cost for the new menu offering?

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