Sunday 24 November 2019

Barney’s Pizza Parlour recently opened for business. The owner wants a cost function estimate to help with

Barney’s Pizza Parlour recently opened for business. The owner wants a cost function estimate to help with future planning. The manager feels that last month’s results fairly represent costs over the coming six months. Last month 600 pizzas were sold. From the following information, use account analysis to estimate the firm’s cost function for pizzas sold.
Wages for part-time help
$2,340
Pizza toppings
180
Pizza dough
240
Store rent
400
Depreciation on furniture and ovens
80
Napkins, paper plates, cups, and straws
75
Liability insurance
100
Advertising
60
Cleaning supplies
15
Managers’ salary
1,400
Utilities (electricity and telephone)
110
Soft drink purchases
375

Develop a cost function and estimate the total costs if 700 pizzas are expected to be sold next month.
Cost function = $
+ $
×   Number of pizzas
Total cost for 700 pizzas?
$

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