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Homework answers / question archive / Janelle? Heinke, the owner of? Ha'Peppas!, is considering a new oven in which to bake the? firm's signature? dish, vegetarian pizza

Janelle? Heinke, the owner of? Ha'Peppas!, is considering a new oven in which to bake the? firm's signature? dish, vegetarian pizza

Finance

Janelle? Heinke, the owner of? Ha'Peppas!, is considering a new oven in which to bake the? firm's signature? dish, vegetarian pizza. Oven type A can handle 20 pizzas an hour. The fixed costs associated with oven A are $22,500 and the variable costs are $3.00 per pizza. Oven B is larger and can handle 42 pizzas an hour. The fixed costs associated with oven B are  $30,000 and the variable costs are $1.00 per pizza. The pizzas sell for $15.00 each.

 

a) The? break-even point in units for oven type A? = _______ units ?(round your response to the nearest whole? number).

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Computation of Break-even Point in Units for oven type A:

Break-even Point in Units for oven type A = (Fixed Costs/(Sales Price per Pizza - Variable Cost per Pizza)

= $22,500/($15 - $3)

= $22,500/$12

Break-even Point in Units for oven type A = 1,875