Reference no: EM132567468

In the commercial section of the newspaper you come across an ad for a pizza delivery business for sale. upon inquiry, you discover that the owner , who wants to sell the business and then retire, has four salaried employees and owns two delivery vehicles. he invites you to look through his books, where you acquire the following information:

                                                             Employees:                                                      BUSINESS:

Owner's salary:                               $5,000 per month Phone:                         $85 per month

Employee salaries and premiums:     $2,000 per month each                     Business insurance: $3,600 per year

Building lease:                                         $2,000 per month

Delivery vehicles: Operations:

Car insurance: $1,200 per year per vehicle Pizza ingredients, materials,

Fuel : $1,125 per month per vehicle and packing $19,125 per month

Oil changes : $225 per month per vehicle Selling price of pizza: $9 per pizza

Vehicles maintenance and repairs: $562.50 per month per vehicle Average number of pizzas sold: 4,500 per month

Question 1: Assume that this is all of the key information. you need to understand this business and therefore want to determine:

a. A unit variable cost

b. A typical monthly net income for the business

c. The contribution margin per pizza

d. The contribution rate