Calculate unit and percentage break-even volumes

Reference no: EM131988242

Problem

Suppose you are the only pizza shop in your community. The marginal cost of making a pizza is $4. You are currently charging $15/per pizza and are considering a 20% price reduction. Since you are currently operating at capacity, selling 400 pizzas a day, you will have to install new equipment (ovens, etc.) if your sales volume increases. The cost of the added equipment is $400 per day for each new increment of 100 pizzas.

a) Calculate unit and percentage break-even volumes for the 20% price reduction (SHOW ALL CALCULATIONS)

b) After calculating the break-even point, you need to decide whether.

Reference no: EM131988242

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