Lassie Company uses cost-plus pricing and has calculated total variable manufacturing cost, total absorption manufacturing cost, and total cost for one of its products. Which of these costs would be the smallest?
A) Total variable manufacturing cost.
B) Total absorption manufacturing cost.
C) Total cost.
D) There is no difference between total absorption manufacturing cost and total cost.
E) More information is needed to correctly answer the question.

Question

Quizplus · Accepted Answer

Total variable manufacturing cost is typically the smallest of the three costs mentioned, as it only includes the variable costs of producing the product (such as direct materials and direct labor). Total absorption manufacturing cost includes both variable and fixed manufacturing costs, while total cost includes all costs associated with producing and selling the product, including variable and fixed manufacturing costs as well as other expenses (such as selling and administrative costs).

Lassie Company Uses Cost-Plus Pricing and Has Calculated Total Variable