Question: Should management lease the same type of oven and force every chain to use the se ovem type? Explain why or why not? Dan Company

Should management lease the same type of oven and force every chain to use the se ovem type? Explain why or why not?  Should management lease the same type of oven and force every

Dan Company owns and oporatos a nationwide chain of pizza stores. The 500 properties Dan chain vary from low-volume, small S town, singie screen pizza places to high volume, big city pizza restaurants 7 Management is considering the purchases of three types of pizza ovens based on baking capacity and cost. These machines would allow pizza restauamts to sell freshly 8 better quality pzzaThis new feature would be advertised and its intended to increase 9i patronage at the company's pizza places and restaurants. 10 11 Annual rental costs and operating costs vary with the size of the ovens. The ovens' capacities and costs are as follows: 12 Small 13 Annual Capacity 35,000 110,000 200,000 15 Costs 16 Annual Oven Rental 17 18 Per Pizza Costs 19 Pizza Ingredients 20 Dough costs (less dough needed in larger ovens) 21 Variable Utities and Energy 22 Total Variable Costs 23 6,000 9,000 15,000 0.13 0.22 0.11 0.14 0.08 0.09 0.05 0.07 0.21 0.43 43 24 Please calculate the break-even (indifference) points between these three sizes. 25 26 Fixed Costs | Unit VC | Break-even Point % of Break-even of capacity | 27 Small 95 28 29 30 31 6,000 9000 15,000 0.43 0.33 0.21 39 87% 25% 36% 71,429

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