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 considered a variable cost for this company? A)The cost of the factory B)Employee wages C)The rope-cutting machine D)All of these expenses are variable costs.

Question

Quizplus · Accepted Answer

Variable costs change with the level of production output. Employee wages for hand-tying, dipping, and winding the lassos would vary depending on the number of lassos produced.

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