Critical thinking exercise Chapter 17-2

THE PIZZA STAND

A student organization has been given permission to operate a pizza stand during the upcoming homecoming weekend. The stand will be located just outside the football stadium, making it accessible during the ball game. The location is also convenient for visitors as they tour the campus at other times during the weekend. An estimated 2,500 visitors will be on campus, in addition to the campus population of 1,500.

Each pizza requires:

1/2 pound of pizza flour

2 ounces of pizza sauce

1/8 pound of pepperoni

1/2 pound of cheese.

Pizza flour costs $8.00 per 10-pound bag; pizza sauce, $4.80 per 64-ounce jar; pepperoni, $18.00 per 5-pound package; and cheese, $15.00 per 5-pound package. Club members will cook the pizzas and staff the stand on a volunteer basis. The university requires each vendor to pay a $25 permit fee and a $50 refundable deposit on the building. Your club plans to donate the profits from the pizza sales to a local childrens hospital.

1. How many pizzas can you anticipate selling?

2. What price should you charge per pizza?

3. How much of each raw material do you need to buy?

4. What will be your probable profit?

5. Develop a financial plan for your weekend enterprise.