Question

Fahad owns a Pizza House. The cost of Ingredient (flour, sauce, spices,etc) to make a Pizza is $2.00. Fahad hires two workers. He pays them $30 per day each. He also incurs a fixed cost of $120 per day. Calculate Fahad’s variable cost per day when he produces 150 Pizza using two workers.

Answer 1

Total Variable cost per day = Cost of labour + Cost of raw material

Cost of labour = Cost per worker * Number of workers = 30 * 2 = $60

Cost of raw material = Cost of making a single pizza * Number of pizzas made 150*2 = $300

Total variable cost per day = 300 + 60 = 360$