S7.20Janelle Heinke, the owner of Ha'Peppas!, is considering a new oven in which to bake the firm's signaturedish, vegetarian pizza. Oven type A can handle 20 pizzas an hour. The fixed costs associated with oven Aare $20,000 and the variable costs are $2.00 per pizza. Oven B is larger and can handle 40 pizzas anhour. The fixed costs associated with oven B are $30,000 and the variable costs are $1.25 per pizza. Thepizzas sell for $14 each.a) What is the break-even point for each oven?b) If the owner expects to sell 9,000 pizzas, which oven should she purchase?c) If the owner expects to sell 12,000 pizzas, which oven should she purchase?d) At what volume should Janelle switch ovens?

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Answered: Janelle Heinke, the owner of…

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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Janelle Heinke, the owner of Ha’Peppas!, is consider-ing a new oven in which to bake the firm’s signature dish, vegetar-ian pizza. Oven type A can handle 20 pizzas an hour. The fixed costs associated with oven A are $20,000 and the variable costsare $2.00 per pizza. Oven B is larger and can handle 40 pizzas anhour. The fixed costs associated with oven B are $30,000 and thevariable costs are $1.25 per pizza. The pizzas sell for $14 each.a) What is the break-even point for each oven?b) If the owner expects to sell 9,000 pizzas, which oven should shepurchase? c) If the owner expects to sell 12,000 pizzas, which oven shouldshe purchase?d) At what volume should Janelle switch ovens?

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