2. Variable costs include: (a) Costs of production that change when the rate of production is altered. (b) All costs in the long run. The difference between total and fixed costs. (d) All of the above. Table 21.4 Expense statements for parachute business (dollars per week) Parachutes produced per week Weekly expense 100 200 Lease on building $1,500 $1,500 $1,500 Sewing machines 600 600 Nylon 400 700 Utilities (electricity, etc.) 150 200 Labor 650 750 Testing and certification 800 800 Use the information in Table 21.4 to answer the following questions. 3. Which items are considered to be fixed costs? lease a bailding 4. Calculate variable costs at an output level of 100 parachutes per week. 5. Calculate total costs at an output level of 100 parachutes per week. Now assume the owner of the parachute business buys the building he is currently leasing so he no longer has a lease expenditure. Calculate the accounting cost at an output level of 200 parachutes per week . Assume the owner still owns the building. Calculate the economic cost at an output level of 200 parachutes per week. Explain why there is a difference in the accounting cost at an output level of 200. parachutes and the economic cost. Exercise 4 This exercise focuses on average total costs. Table 21.5 represents the cost data for producing cement in three different plants, where Plant 1 is the smallest and Plant 3 is the largest Table 21.5 Costs associated with three plants Output (tons per day) 1. 2 3 4 5 6 7 8 . 9 10 Average total cost: Plant 1 $10 9 8 10 11 -12 13 on A CO Plant 2 12 10 6 8 10 13 12 11 4 Plant 3 298