Answer: AED 2.50
Explanation:
The variable cost of production is the changing cost that is incurred in order to produce each additional unit. In other words, they increase as the number of units produced increases.
In this scenario, the baker incurs a cost of AED 2.50 for the ingredients that make a single cake. This is the variable cost because it is incurred to make each additional cake and will therefore increase with the number of cake produced.
