Mike Solid started a pizzeria in 1999. For this purpose he rented a building for $1,800 per
month. Two persons were hired to work full-time at the restaurant and six college students
were hired to work 30 hours per week delivering pizza. An outside accountant was hired
for tax and bookkeeping purposes at a cost of $900 per month. The necessary restaurant
equipment and delivery cars were purchased with cash. Mr. Solid has noticed that ex-
penses for utilities and supplies have been rather constant.
Mr. Solid increased his business between 1999 and 2001. Profits have more than dou-
bled since 1999. Mr. Solid does not understand why his profits have increased faster than
his volume.
A projected income statement for 2002 has been prepared by the accountant and is
shown below:
Required:
a. What is the break-even point in number of pizzas that must be sold?
b. What is the cash flow break-even point in number of pizzas that must be sold?
c. If Mr. Solid withdraws $14,400 for personal use, how much cash will be left from
the 2002 income-producing activities?
d. Mr. Solid would like an after-tax net income of $60,000. What volume must be
reached in number of pizzas in order to obtain the desired income?
e. Briefly explain to Mr. Solid why his profits have increased at a faster rate than his
sales.
f. Briefly explain to Mr. Solid why his cash flow for 2002 will exceed his profits.
Text Description automatically generated
For this short paper activity, you will learn about the three delays model, which explains…
Topic : Hospital adult medical surgical collaboration area a. Current Menu Analysis (5 points/5%) Analyze…
As a sales manager, you will use statistical methods to support actionable business decisions for Pastas R Us,…
Read the business intelligence articles: Getting to Know the World of Business Intelligence Business intelligence…
The behaviors of a population can put it at risk for specific health conditions. Studies…