SOLUTION: Scenario: Pedro Lopez, the owner of Pedro's is considering a new oven in which to bake the firm's signature dish, vegetarian pizza. Oven A can handle 20 pizzas an hour. The annual

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Question 285457: Scenario: Pedro Lopez, the owner of Pedro's is considering a new oven in which to bake the firm's signature dish, vegetarian pizza. Oven A can handle 20 pizzas an hour. The annual fixed costs associated with oven A are $20,000 and the variable costs are $2.00/pizza. Oven B is larger and can handle 40 pizzas/hr. The fixed costs associated with oven B are $30,000/yr and the variable costs are $1.25/pizza. The pizzas sell for $14 each.
a. What is the break-even point in the number of pizzas for each type of oven.
b. If Pedro expects to sell 9,000 pizzas/yr, which oven should he purchase.
c. If Pedro expects to sell 9,000 pizzas/yr, which oven should he purchase.
d. At what volume should Pedro swicth ovens?
Answer by zouz123(1) (Show Source):
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