. A. Use the following is cost information for the Creamy Crisp Donut Company to
ID: 1118301 • Letter: #
Question
.
A.
Use the following is cost information for the Creamy Crisp Donut Company to answer questions 50-54:
Entrepreneur's potential earnings as a salaried worker = $50,000
Annual lease on building = $22,000
Annual revenue from operations = $380,000
Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000
Entrepreneur's forgone interest on personal funds used to finance the business = $6,000
50. Refer to the data. Creamy Crisp's explicit costs are:
A.
$286,000.
B.
$150,000.
C.
$94,000.
D.
$156,000.
51.
Refer to the data. Creamy Crisp's implicit costs, including a normal profit, are:
A.
$136,000.
B.
$150,000.
C.
$94,000.
D.
$156,000.
B.
.
A.
Use the following is cost information for the Creamy Crisp Donut Company to answer questions 50-54:
Entrepreneur's potential earnings as a salaried worker = $50,000
Annual lease on building = $22,000
Annual revenue from operations = $380,000
Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000
Entrepreneur's forgone interest on personal funds used to finance the business = $6,000
50. Refer to the data. Creamy Crisp's explicit costs are:
A.
$286,000.
B.
$150,000.
C.
$94,000.
D.
$156,000.
51.
Refer to the data. Creamy Crisp's implicit costs, including a normal profit, are:
A.
$136,000.
B.
$150,000.
C.
$94,000.
D.
$156,000.
B.
Explanation / Answer
Explicit costs are direct payments made to others in the course of running a business such as wage, rent and materials, etc.
In the given problem,
Creamy Crisp's Explicit costs are = Annual Lease on building + Payment to workers + Utilities Costs
= $ 22000 + $ 120000 + $ 8000 = $ 150000
Answer is B. $ 150000
Answer to 51
Creamy Crisps implicit cost including a normal profit = Entrepreneurs potential economic profit from the next best entrepreneurial activity + Entrepreneurs forgone interest on personal funds used to finance the business + Entrepreneurs potential earnings as a salaried worker
= $ 80000 + $ 6000 + $ 50000 = $ 136000
Answer is A) $ 136000
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