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Address true costs both variable and fixed

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Question

Suppose you have a friend who thinks they make the best pizza in the whole world and is thinking of opening a pizza parlor in town. They tell you that it only costs about $4 to make a large pizza and that they think they could charge $7 a pizza a make a killing. After a little research you determine that they would have approximately $4,000 in monthly fixed costs as well as their $6 of variable costs (they were not taking into consideration employees).

What would you say to them? Address true costs, both variable and fixed, number of pizzas that they would need to sell to break-even as well as any profits that they may want to have on a monthly basis.

Reference no: EM132405400

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