Suppose Larry's Lariats produces lassos in a factory,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.Which of the following would be considered a fixed cost for this company?
A) Employee wages
B) The cost of rope
C) The packaging material
D) None of these would be considered a fixed cost.

Question

Quizplus · Accepted Answer

Fixed costs are expenses that do not change with the level of production. Employee wages, the cost of rope, and packaging material are variable costs because they vary with the number of lassos produced.

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