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Break-even analysis for Ha'Peppas pizza ovens.

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Janelle Heinke, the owner of Ha'Peppas!, is considering a new oven in which to bake the firm's signature dish, vegetarian pizza. Oven type A can handle 20 pizzas an hour. The fixed costs associated with oven A are $20,000 and the variable costs are $2.00 per pizza. Oven B is larger and can handle 40 pizzas an hour. The fixed costs associated with oven B are $30,000 and the variable costs are $1.25 per pizza. The pizzas sell for $14 each. What is the break-even point for oven A? What is the break-even point for oven B?

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The expert calculates the break-even points for both ovens.

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Each pizza sells for $14. It cost $2 to make each pizza in Oven A. So the profit without considering fixed costs is $12.

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