Suppose Larry's Lariats produces lassos in a factory, using nine feet of rope to make each lasso. The rope is put into a machine that automatically cuts it to the right length and seals the ends to prevent fraying. The rope is then hand tied, dipped, and wound before being placed in a packaging machine to prepare it for retail sale. Which of the following expenses would be included in the company's total costs? A)The cost of the rope B)Employee wages C)The rope-cutting machine D)All of these expenses would be included in total cost.

Question

Quizplus · Accepted Answer

All of these expenses (cost of the rope, employee wages, and the rope-cutting machine) are part of the total costs of producing lassos. The cost of the rope and employee wages are variable costs that change with the level of production, while the cost of the rope-cutting machine is a fixed cost, as it does not change with the level of production.

Suppose Larry's Lariats Produces Lassos in a Factory, Using Nine