Question: Section B (70 marks) Question 1 (35 marks) John is a Pizzeria located near a local University. The restaurant not only sells two types of

 Section B (70 marks) Question 1 (35 marks) John is a

Section B (70 marks) Question 1 (35 marks) John is a Pizzeria located near a local University. The restaurant not only sells two types of pizza: Thin Crust and Deep Dish, but also sell Pasta. Information relating to the three products for the next month follows: Thin Crust Deep Dish Pasta 1,000 600 400 Expected sales (units) Sales price 18 20 10 Variable cost 8 6 7 The company has monthly fixed costs of 12,000 and a tax rate of 20%. Required: a) Compute the company's expected profit (net income) for the upcoming fiscal period. (10 Marks) b) Compute the company's sale mix. (5 Marks) c) Assuming a consistent sales mix, how many units of each product type must the company sell to break even? (10 Marks) d) Assuming a consistent sales mix, if the company wishes to earn net income of 40,000, how many units of each product type must be sold? (5 Marks) e) Compute the margin of safety in both revenue and percentage terms

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