Question

Suppose a pizza parlor has the following production costs 4$ in labor per pizza, 3$ in ingredients per pizza, .40$ in electricity per pizza, 2000$ in restaurant rent per month, and $450 in insurance per month. Assume the pizza parlor produces 1,000 pizzas in a month. What is the total variable cost to produce the 1,000 pizzas?

Answer 1

Answer:

the variable cost comes out to be $740

Explanation:

given,

labor per pizza =  4$

ingredients per pizza= 3$

electricity cost per pizza = .40$

restaurant rent per month = 2000$

insurance per month = $450

pizza produced per month = 1,000

variable cost  per pizza = labor cost + ingredients cost + electricity cost

variable cost  per pizza=  4$ + 3$ + .40$  

                                         =  7.4$

variable cost per month = 1000 × 7.4$

                                         = 740 $

hence the variable cost comes out to be $740.