Use the accounts listed below to answer the questions about the profit of a business. Total Revenue ………………………………………………………………..$100,000 Hired Labor ……………………………………………………………………$25,000 Materials Purchased …………………………………………………………...$25,000 Interest that the owner could have earned on an alternative investment ……… $5,000 Income the owner could have earned by renting the firm’s building …………. $4,000 Utility Payments ………………………………………………………………..$5,000 Income the owner could have earned in an alternative business venture ……..$30,000 Cost of shipping the firm’s output to buyers ………………………………… $1,000 Identify the explicit costs incurred by this business. Why are they explicit costs? Identify the implicit costs incurred by the business. Why are they implicit costs? How much accounting profit does the firm make? Show your work. How much economic profit (loss) does this firm make? Show your work. If these financial results continue in the long run, will this firm stay in this business?
Use the accounts listed below to answer the questions about the profit of a business. Total Revenue ………………………………………………………………..$100,000 Hired Labor ……………………………………………………………………$25,000 Materials Purchased …………………………………………………………...$25,000 Interest that the owner could have earned on an alternative investment ……… $5,000 Income the owner could have earned by renting the firm’s building …………. $4,000 Utility Payments ………………………………………………………………..$5,000 Income the owner could have earned in an alternative business venture ……..$30,000 Cost of shipping the firm’s output to buyers ………………………………… $1,000 Identify the explicit costs incurred by this business. Why are they explicit costs? Identify the implicit costs incurred by the business. Why are they implicit costs? How much accounting profit does the firm make? Show your work. How much economic profit (loss) does this firm make? Show your work. If these financial results continue in the long run, will this firm stay in this business?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
- Use the accounts listed below to answer the questions about the profit of a business.
Total Revenue ………………………………………………………………..$100,000
Hired Labor ……………………………………………………………………$25,000
Materials Purchased …………………………………………………………...$25,000
Interest that the owner could have earned on an alternative investment ……… $5,000
Income the owner could have earned by renting the firm’s building …………. $4,000
Utility Payments ………………………………………………………………..$5,000
Income the owner could have earned in an alternative business venture ……..$30,000
Cost of shipping the firm’s output to buyers ………………………………… $1,000
- Identify the explicit costs incurred by this business. Why are they explicit costs?
- Identify the implicit costs incurred by the business. Why are they implicit costs?
- How much accounting profit does the firm make? Show your work.
- How much economic
profit (loss ) does this firm make? Show your work. - If these financial results continue in the long run, will this firm stay in this business?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education