Make-your-own pizza pie is pizzeria

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Reference no: EM131975090

Make-Your-Own Pizza Pie is a pizzeria in Cape Girardeau, MO. The owner, Cosmo Kramer, has set the price of a pizza at $15. The average cost of pizza ingredients is $8 per pizza and the average labor cost per pizza is $4. Kramer pays annual fixed costs (store rent and insurance) are $24,000. In 2017, Kramer sold 15,000 pizzas. SHOW CALCULATIONS OR NO POINTS WILL BE GIVEN. A. How much money (before tax) was made by Make-Your-Own Pizza in 2017? B. Assume that Kramer invests in a $5,000 advertising campaign which increases pizza sales to 25,000 units. If Kramer is in a 20% tax bracket, how much will he earn after taxes. C. Assume the original facts in the problem presented. Kramer has been notified by his supplier that the cost of pizza ingredients will increase by 25% in 2018. Further, Kramer's landlord has advised him that the annual rent is going up by $5,000. If Kramer expects to sells 15,000 pizzas in 2018 and wants to make $36,800 after taxes (at a 20% rate), what price must he charge for a pizza in 2018? D. Kramer is considering investing $30,000 in a kiosk-based pizza ordering system that will cut labor costs per pizza from $4 to $2.The kiosk-based system will also require annual on-going maintenance and software support of $5,000. Assuming the same facts shown in the introduction (15,000 pizzas sold) and that the kiosk can be fully depreciated in 2018, what will cash flow be in 2018 after this investment? What will cash flow be in 2019?

Reference no: EM131975090

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