Key quantity breakpoints for each location on annual basis

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Reference no: EM13902355

A restaurant franchise owner is considering three location alternatives. The projected operating costs (on an annual basis) have been estimated as follows: Location A Location B Location C Startup Costs $75,000 $77,500 $72,000 Annual Fixed Cost $20,000 $25,000 $17,500 Labor Cost per pizza $1.35 $1.30 $1.40 Ingredient Cost per pizza $3.20 $3.15 $3.25 Overhead cost per pizza $0.75 $0.71 $0.80 Delivery cost per pizza $0.22 $0.20 $0.25 Selling Price per pizza $10.00 $10.20 $9.85 a. If the forecast of additional demand for the next year is 50,000 pizzas, which alternative should be selected? b. What are the key quantity breakpoints for each location on an annual basis? To cover startup costs? c. Graph annual operating profits for each location. d. What are the key quantity breakpoints (annually) between the three locations? e. Over what range of annual output is each location an optimal choice.

Reference no: EM13902355

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