P2-54A Calculate the total and average costs (Learning Objective 7) The owner of Pizza-House Restaurant is disappointed because the restaurant has been averaging 3,000 pizza sales per month, but the restaurant and waitstaff can make and serve 5,000 pizzas per month. The variable cost (for example, ingredients) of each pizza is $2.00. Monthly fixed costs (for example, depreciation, property taxes, business licence, and manager's salary) are $6,000 per month. The owner wants cost information about different volumes so that he can make some operating decisions. Requirements 1. Fill in the following chart to provide the owner with the cost information he wants. Then use the completed chart to help you answer the remaining questions. Monthly pizza volume 2,500 5,000 Total foxed costs Total variable costs Total costs - 11 || Fixed cost per pizza Variable cost per pizza Average cost per pizza . || || | | . || Sales price per pizza $10.00 $10.00 $10.00 Average profit per pizza 2. From a cost standpoint, why do companies such as Pizza House Restaurant want to operate near or at full capacity? 3. The owner has been considering ways to increase the sales volume. He believes he could sell 5,000 pizzas a month by cutting the price from $10 a pizza to $9.50. How much extra profit (above the current level) would he generate if he decreased the sales price? (Hint: Find the restaurant's current monthly profit and compare it to the restaurant's projected monthly profit at the new sales price and volume.)