1. What costs are relevant when determining how many pizzas a month Zume Pizza must sell to break even?
Original blog posting (March 9, 2017)

2. Zume Pizza Based in Mountain View, California
Pizza truck holds 56 ovens that are connected to ordering system and GPS
Robots help make the pizzas
Pizzas are put in the oven four minutes before truck reaches the customer’s house

3. Zume Pizza truck

4. Customer orders pizza

5. Humans toss the dough, cut vegetables, and put on toppings

6. Robots put on pizza sauce

7. Truck has 56 ovens. Each oven is connected to order system and GPS

8. Robots put pizzas in oven exactly four minutes before truck reaches the house

9. Humans pull out pizza and put it into the cutter

10. Pizza is delivered

11. Zume Pizza Assume the average selling price per pizza is $18
Estimates of costs incurred by Zume Pizza:
Description of Cost
Cost Estimate
Ingredient cost per pizza $
Truck fuel cost per delivery $
Cost of pizza delivery truck (est. useful life 5 years, no salvage value)
$ ,000
Cost of initial software development (estimated useful life 3 years)
$ ,000
Annual maintenance/update costs of software
$ ,000
Supplies cost per pizza (box, napkins, etc.) $
Cost to park pizza delivery truck per year (garage facility)
$ ,000
Insurance and other regulatory costs per year
$ ,000
Cost of cofounders' salaries per year
$ 150,000
Cost to rent restaurant kitchen facility for testing & food prep (per year)
$ ,000
Direct labor cost per pizza (driving truck & preparing pizza in truck) $

12. Question 1
From the list above, what costs would you classify as variable with respect to the cost of a Zume pizza? Are there any other variable costs you could envision that Zume might incur per pizza? Explain.

13. Question 2
From the list above, what costs would you classify as fixed with respect to the cost of a Zume pizza? Are there any other fixed costs you could envision that Zume might incur in its pizza business? Explain.

14. Question 3
What costs from the list and any costs you thought of for Questions #1 and #2 above would you use to calculate the break even number of pizzas that Zume Pizza must sell per day? Why did you included these costs? Calculate the break even number of pizzas.

15. Question 4
Given your answer for the current break even number of pizzas, calculate Zume’s margin of safety in number of pizzas (if any margin of safety exists.) What does this margin of safety mean?

16. Question Recap
From the list above, what costs would you classify as variable with respect to the cost of a Zume pizza? Are there any other variable costs you could envision that Zume might incur per pizza? Explain.
From the list above, what costs would you classify as fixed with respect to the cost of a Zume pizza? Are there any other fixed costs you could envision that Zume might incur in its pizza business? Explain.
What costs from the list and any costs you thought of for Questions #1 and #2 above would you use to calculate the break even number of pizzas that Zume Pizza must sell per day? Why did you included these costs? Calculate the break even number of pizzas.
Given your answer for the current break even number of pizzas, calculate Zume’s margin of safety in number of pizzas (if any margin of safety exists.) What does this margin of safety mean?

17. For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at Questions or comments? Contact Dr. Wendy Tietz at