Question

Suppose a pizza parlor has the following production​ costs: ​$3.00 in labor per​ pizza, ​$4.00 in ingredients per​ pizza, ​$0.80 in electricity per​ pizza, ​$1 comma 500 in restaurant rent per​ month, and ​$300 in insurance per month. Assume the pizza parlor produces 5 comma 000 pizzas per month. What is the variable cost of production​ (per month)?

Answer 1

Answer:

$39,000

Explanation:

The calculation of variable cost of production​ is given below:-

For computing the variable cost per month first we need to find out the Variable cost per pizza which is show, below:-

Variable cost per pizza = Labor cost + Ingredients + Electricity

= $3.00 + $4.00 + $0.80

= $7.8

Variable cost per month = Pizzas per month × Variable cost per pizza

= 5,000 × $7.8

= $39,000