Pizza Pizazz is a local restaurant. Price and cost information follows:
Price per pizza ——–$13.31
Variable cost per pizza
Direct labor——– 1.10
Overhead (box, etc.)——.30
Fixed cost per month——-$4,448.20
1. Calculate Pizza Pizazz’s new break-even point under each of the following independent scenarios (Round your intermediate calculations to 2 decimal places and final answer to next whole number.):
a. Sales price increases by $1.90 per pizza.
b. Fixed costs increase by $460.00 per month.
c. Variable costs decrease by $.45 per pizza.
d. Sales price decreases by $.60 per pizza.
2: Assume that Pizza Pizazz sold 475 pizzas last month. Calculate the company’s degree of operating leverage. (Round your intermediate calculations and final answer to 2 decimal places)
Degree of operating leverage:________
3: Using the degree of operating leverage, calculate the impact on profit caused by a 13.00 percent increase in sales revenue. (Round your intermediate calculations and final answer to 2 decimal places. Omit the “%” sign in your response.)
Effect on profit:_______%