Edward Cheezer's makes and sells frozen four-cheese pizzas, New York-style. The expected selling price is $10 per pizza. The projected variable cost per pizza is $6. The estimated fixed costs per month are $10,000. If 6,000 pizzas are sold in a given month and fixed costs increase by $5,000, the overall profit is
A) $15,000.
B) $19,000.
C) $20,000.
D) $9,000.

Question

Quizplus · Accepted Answer

The profit is calculated as (Selling Price - Variable Cost) * Quantity Sold - Fixed Costs. Here, ($10 - $6) * 6,000 - ($10,000 + $5,000) = $24,000 - $15,000 = $9,000.

Edward Cheezer's Makes and Sells Frozen Four-Cheese Pizzas, New York-Style