Midterm2 Spr2009 Solution

# Midterm2 Spr2009 Solution - 6A:002 Managerial Accounting...

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Page 2 Remember: When necessary, round your answers. Round numbers bigger than 1,000 to the nearest whole number. Round numbers less than or equal to 1,000 to four decimal places. Write your answers on the answer sheet on the front page of the exam question document. Use the following information about Little Italy to answer questions 1 through 3. Little Italy Pizzaria estimates its costs as follows: \$6,000 per month for building and equipment rental \$4 in food cost and direct labor for each pizza that it sells Selling price for the pizzas averages \$7. In January 2009, Little Italy sold 5,000 pizzas with total revenue of \$35,000. 1. Little Italy expects that its sales will drop in February due to cold weather. Compute the amount of total cost it should expect if sales drop to 4,000 pizzas. Variable cost 4,000 @ \$4 \$16,000 Fixed cost 6,000 Total cost \$22,000 2. Compute Little Italy’s breakeven point in units. Breakeven means profit is \$0. So, find the quantity, Q, where
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Midterm2 Spr2009 Solution - 6A:002 Managerial Accounting...

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