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? |
|
$ |
