Ask Question
27 July, 15:50

Suppose a pizza parlor has the following production costs: $5.00 in labor per pizza, $3.00 in ingredients per pizza, $0.50 in electricity per pizza, $2 comma 500 in restaurant rent per month, and $450 in insurance per month. Assume the pizza parlor produces 6 comma 000 pizzas per month. What is the variable cost of production (per month) ?

+5
Answers (1)
  1. 27 July, 16:16
    0
    Variable costs is $51,000

    Explanation:

    Variable costs as the name implies are costs that change based on changes in quantity or vary by a certain change in unit of measure.

    For example a costs that changed by each unit of production, each unit of sale, as a percentage of another value like sales etc

    variable costs per unit:

    $5.00 in labor per pizza,

    $3.00 in ingredients per pizza, $0.50 in electricity per pizza,

    Total variable costs = $8.50 per unit.

    Fixed costs:

    $2,500 in restaurant rent per month,

    $450 in insurance per month.

    Total fixed costs = $2,950

    the pizza parlor produces 6,000 pizzas per month.

    Therefore variable costs = $8.50 x 6,000 units = $51,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Suppose a pizza parlor has the following production costs: $5.00 in labor per pizza, $3.00 in ingredients per pizza, $0.50 in electricity ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers