Which of the following is NOT a variable cost for a pizza restaurant?

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Question restatement: Which of the following is NOT a variable cost for a pizza restaurant?

Option 1: Rent for the building. This is typically a fixed cost because the rent amount does not change with the level of pizza production in the short run. It remains the same month to month regardless of how many pizzas are made.

Option 2: Wages for pizza makers. Wages can be variable if they are paid based on hours worked or number of pizzas produced. In many cost analyses, labor costs rise with production, making them a variable cost, though some staffing structures may treat certain labor as fixed. Here, the standard assumption is that pizza-maker wages vary with output, so they are considered variable.

Option 3: Cost of cheese and sauce. These are direct materials tied to production; as more pizzas are made, more cheese and sauce are consumed. This makes them a classic example of a variable cost.

Option 4: Electricity for the ovens. Utility costs like electricity generally vary with usage, which increases with the number of pizzas baked. Therefore, electricity is typically treated as a variable cost for a production-driven business.

Summary of evaluation: Rent is the only item that does not change with the level of production in the short term, while wages (depending on structure), ingredients, and utilities typically scale with output.

Therefore, among the given options, the item that is NOT a variable cost is Rent for the building.

ECON&201 15109 Costs of Production

Which of the following is NOT a variable cost for a pizza restaurant?

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