Question

As an entrepreneur, there are going to be many decisions that you need to make, such as the price to charge your customers for your goods and services. You have just graduated from college and recently opened a specialty pizza restaurant. Based on surveys conducted in your area, you determine that it is feasible to sell your specialty pizzas for $15. The cost for making the pizzas includes a fixed cost of $55 and a labor cost of $4 per pizza.

a. Establish an equation to determine revenue.
b. Establish an equation to determine total cost.
c. How many pizzas must be sold to break even (i.e., you experience neither a profit nor a loss)? Interpret your result.

Answer 1

for x pizzas,

revenue = 15x
cost = 55 + 4x

break-even when revenue = cost

15x = 55 + 4x
x = 5
so, sell more than 5 pizzas to make a profit.

Answer 2

The company would need to sell more 75.00 to make a profit and break even