The management of Rocko\'s Pizzeria is considering a special promotion for the l

Question

The management of Rocko's Pizzeria is considering a special promotion for the last two weeks of October, which is normally a relatively low-demand period. The special promotion would involve selling two medium pizzas for the price of one, plus 1 cent. The medium pizza normally sells for $12.99 and has variable expenses of $4.50. Expected sales volume without the special promotion is 600 medium pizzas per week.

Calculate the total contribution margin generated by the normal volume of medium pizzas in a week. (Do not round your intermediate calculations. Omit the "$" sign in your response.)

Calculate the total number of medium pizzas that would have to be sold during the 1-cent sale to generate the same amount of contribution margin that results from the normal volume. (Do not round your intermediate calculations.)

Calculate the total contribution margin generated by the normal volume of medium pizzas in a week. (Do not round your intermediate calculations. Omit the "$" sign in your response.)

Explanation / Answer

Under the promotion deal, a pair of mediums will fetch $13 total, or $6.5 per on average. No reason to expect the unit variable costs to change, so each pizza will generate a unit contribution margin of ? And so then, how many pizzas in total must be sold to garner total contribution margin of $5,094? Or equivalently, each pair of mediums will have revenue of $13 and variable costs of $9. So how many pairs must be sold to generate total contribution margin of $5,094? (Then multiply the number of pairs by two to derive the number of individual pizzas.)

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