Final answer:
The factory manager's salary is an indirect cost of production, spreading across units produced and contributing to economies of scale until they plateau.
Step-by-step explanation:
The factory manager's salary would be an indirect cost of a particular variety, such as chicken noodle soup. In the context of economies of scale, as the quantity of production increases, the average costs of production, such as making alarm clocks or toaster ovens, tend to decrease.
This is due to the spreading of fixed costs, like the factory manager's salary, over a greater number of units produced. However, there is a point where economies of scale no longer result in reduced costs, as demonstrated by Production Plant V, which cannot produce at a lower average cost despite a larger output level compared to Production Plant L.