Answer:
The variable cost of the production amounts to $29,400
Explanation:
Variable costs are those kind of expenses which changes as the quantity of the good as well as the service that produces by business changes.
The variable cost of the production is computed as:
Variable cost = Labor cost per pizza + ingredients cost per pizza + Electricity cost per pizza
where
Labor cost per pizza is $5.00
Ingredients cost per pizza is $4.00
Electricity cost per pizza is $0.80
Putting the values above:
Variable cost = $5.00 + $4.00 + $0.80
Variable cost = $9.00 + $0.80
Variable cost = $9.80
Now, computing the variable cost of production as:
Variable cost of production = Variable cost × Pizza produces per month
Variable cost of production = $9.80 × 3,000
Variable cost of production = $29,400
