Pizza Example

Base case For a school fundraising event, you went to Costco and bought-10 pizzas at $10 each pizza pie, with total cost $10 x 10 = $100. Each pie has 10 slices, therefore $1 variable cost per slice You sell each slice at $3 $3 x 10 x 10 = $300 (this is your revenue) Gross Margin = $300 -$100 = $200 Contribution margin per slice is $3-$1=$2 Per unit in this example means per slice of pizza, not an entire pizza pie which contains 10 slices.

Sales ($3 per slice x 10 slices x 10 pies) $300, less cost of goods sold ($10 per pie x 10 pies) $100. Gross profit $200, less fixed costs booth rental $50, umbrella rental $20. Total fixed costs $70 Net income (Profit) $130

Breakeven Analysis Workshcct Print and fill in by hand, not typed (zero grades if typed). Take a picture and upload. If you do not have a printer, ok to copy the worksheet by hand. Show your work and circle your answers. For example, if you got the answer by adding 2 numbers *4+5", then you should show your work "4+59", hen circle the answer. Review the Pizza example in the lecture slides and Stress-Buster example in the supplemental reading, Part 1: Using the pizza base case example in the lecture, and assume the price is lowered to $2.50 per slice and booth rental cost increased to $60: Pizza Fund Raising Income Statement Sales ($ per slice x 10 slices per pie x 10 pies) $ less cost of goods sold (S_ per pie x 10 pies) $ Gross profit $ less fixed costs booth rental umbrella rental s Total fixed costs s Net income (Profit) $ What is the breakeven point? (how many slices need to sell to breakeven?) Fixed costs = Variable cost per unit Contribution margin per unit = Calculate breakeven units