Suppose Larry's Lariats produces lassos,and uses nine feet of rope to make each lasso.The rope is put into a machine that automatically cuts it to the right length,then 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.The total costs for this company would include:

Question

Quizplus · Accepted Answer

All of these expenses would be included in total cost. The cost of rope and the wages of employees involved in the production process are direct costs. The cost of the rope-cutting machine is a fixed cost that is incurred in the production process. Therefore, all of these expenses would be included in the total cost of producing lassos for Larry's Lariats.

Suppose Larry's Lariats Produces Lassos,and Uses Nine Feet of Rope