Question

Shelly's pizza sells an average of 230 pizzas per week, of which 40% are single-topping pizzas and 60% are supreme pizzas with multiple toppings. Singles sell for 8$ each amd incur variable costs of $6. Supremes sell $14 each and incur variable costs of 9$. The contribution margin per unit and total contribution margin for singles and supremes are?

1.) the contribution margins for Singles are?

2.) The contribution margins for Supremes are?

Answer 1

Answer:

1) The contribution margins for Single pizza = $184

2)  The contribution margins for supreme pizza = $690

Explanation:

Given:

Average number of Pizzas sold per week = 230

Number of single topping pizzas sold = 40% of 230 = 92

Number of supreme pizzas sold = 60% of 230 = 138

Selling cost of single topping pizza = $8

Variable cost of single topping pizza = $6

Selling cost of supreme pizza = $14

Variable cost of supreme pizza = $9

Now,

The contribution margins for per unit Single pizza

= Selling cost - Variable cost

= $8 - $6

= $2

The contribution margins for Single pizza = $2 × 92 = $184

The contribution margins for per unit supreme pizza

= Selling cost - Variable cost

= $14 - $9

= $5

The contribution margins for supreme pizza = $5 × 138 = $690