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XYZ Nonprofit is exploring a new pizza delivery initiative using its existing kitchen facilities. The standard price for a pizza is $13.00, with ingredient costs at $1.75 per pizza. The nonprofit plans to hire a manager for $35,000/year, pay $2.00 commission to drivers per delivered pizza, and invest $15,000 in a direct mail campaign targeting approximately 3,000 corporate accounts. This analysis determines the required number of pizza sales to break even, assessing whether XYZ Nonprofit should move forward with the business opportunity.
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Conduct A Breakeven Analysis XYZ Nonprofit decides to use its existing kitchen space to open a pizza delivery business for corporate accounts. The standard price of a pizza with regular delivery is $13.00. Ingredients for one pizza are estimated to cost $1.75/pizza. The nonprofit will hire a manager at $35,000/year as well as drivers to deliver its pizzas. Commission to drivers on each pizza delivered is $2.00/pizza. The company will conduct a direct mail campaign that is estimated to cost $15,000. The nonprofit’s market research indicates that there are approximately 3000 potential corporate accounts and that each successfully wooed account would purchase, on average, .45 pizzas per day. Should XYZ Nonprofit pursue this opportunity? How many pizzas need to be sold to breakeven?
