Compute the number of pizzas that must be sold to earn a net profit of \$60,000.I have decided to open a pizza parlor in my hometown. I plan to deliver my pizzas in a four mile radius from my shop....

Compute the number of pizzas that must be sold to earn a net profit of \$60,000.

I have decided to open a pizza parlor in my hometown. I plan to deliver my pizzas in a four mile radius from my shop. My annual fixed expenses are \$54,000. I will charge \$10 for a pizza and it costs \$6 to make and deliver each pizza. Do not calculate in income taxes.

justaguide | College Teacher | (Level 2) Distinguished Educator

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The annual fixed expenses of the pizza parlor are \$54000. The cost of delivering each pizza is \$6 and the prize of each pizza is to be kept at \$10.

To earn a profit of \$60000 let the number of pizzas required to be sold be X. The total cost is the sum of the the fixed cost i.e. \$54000 and the variable cost, which for X pizzas is 6*X. The total revenue earned in selling X pizzas is 10*X

Profit = revenue earned - cost incurred

=> 60000 = 10*X - 54000 - 6*X

=> 4*X = 114000

=> X = 114000/4

=> X = 28500

A total of 28500 pizzas must be sold to make a profit of \$60000