Suppose a pizza parlor has the following production costs: $3.00 in labor per pizza, $1.00 in ingredients per pizza, $0.90 in electricity per pizza, $3,500 in restaurant rent per month, and $200 in insurance per month. Assume the pizza parlor produces 3,000 pizzas per month. What is the variable cost of production (per month) ?

variable cost of production per month $ 14700.00

Explanation:

Variable cost is given as

Variable cost per pizza = labour cost + ingredients + electricity

where,

labour cost $3.00

ingredients cost $1.00

electricity cost $0.90

Variable cost per pizza = 3.00+1.00+0.90 = $4.90

total production/month = 3000 pizzas

variable cost of production per month = 3000 * 4.90 = $ 14700.00