Janelle Heinke, the owner of Ha\'Peppasl, is considering a new oven in which to

Question

Janelle Heinke, the owner of Ha'Peppasl, is considering a new oven in which to bake the firm's signature dish, vegetarian pizza. Oven type A can handle 22 pizzas an hour. The fixed costs associated with oven A are $22,500 and the variable costs are $3.00 per pizza. Oven B is larger and can handle 42 pizzas an hour. The fixed costs associated with oven B are $32,500 and the variable costs are $1.00 per pizza. The pizzas sell for $15.00 each. a) The break-even point in units for oven type A = 1875 units (round your response to the nearest whole number) The break-even point in units for oven type B 2321 units (round your response to the nearest whole number) b) If Janelle is expecting that the pizza shop is going to be able to sell 10,000 pizzas, then she should select oven B c) If Janelle is expecting that the pizza shop is going to be able to sell 13,000 pizzas, then she should select ovenB d) The volume at which Oven A and Oven B have the same cost (crossover point) and Janelle would be indifferentpizzas (round your response to the nearest whole number)

Explanation / Answer

d) for finding the volume at which Oven A and Oven B will have the same cost and Janelle would be indifferent, we equate the costs of both the ovens for the crossover volume of x units of pizza and solve for x:

22,500+3x=32500+x

solving for x:

2x=32500-22500

x=10000/2

x=5000

hence, the crossover point = 5000 pizzas

d) for finding the volume at which Oven A and Oven B will have the same cost and Janelle would be indifferent, we equate the costs of both the ovens for the crossover volume of x units of pizza and solve for x:

22,500+3x=32500+x

solving for x:

2x=32500-22500

x=10000/2

x=5000

hence, the crossover point = 5000 pizzas

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