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 $11.99 and has variable expenses of $3.2. Expected sales volume without the special promotion is 395 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. Round your answer to the nearest dollar amount. 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. Round your answer to the nearest whole number.)

revenues-variable expense=contribution margin

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 $11.99 and has variable expenses of $3.2. Expected sales volume without the special promotion is 395 medium pizzas per week.

Explanation / Answer

Hi,

Please find the answers as follows:

Part A:

Contribution Margin = 395*11.99 - 395*3.2 = 3472

Answer is 3472

Part B:

Selling Price = (11.99 + .01)/2 = 6 (since the scheme is 1 for 1)

Variable Cost = 3.2

Contribution Margin = 2.8

Total Number of Pizzaz = 3472/2.8 = 1240

Answer is 1240 pizzaz

Thanks.

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