Answer:
C) $4,000
Explanation:
To calculate economic profit we can use the following formula:
economic profit = total revenue - (accounting costs + implicit costs) = (total revenue - accounting cost) - implicit costs
where:
- accounting profit = total revenue - accounting cost = $50,000
- implicit costs: ($20,000 x 5%) + $45,000 = $1,000 + $45,000 = $46,000
economic profit = $50,000 - $46,000 = $4,000
It is called A COST DRIVER. A cost driver refers to any factor that causes a change in the cost of an activity. Cost driver is used to assign overhead costs to the quantity of a particular goods that is manufactured. Example of a cost driver is direct labour hours input into a production operation.
Answer:
The answer is -$4,940
Explanation:
Net income = Profit before interest and tax minus interest minus taxes
We rewrite the formula to get interest:
Interest = Profit before interest and tax minus taxes minus net income
= $27,130 - $5,450 - $16,220
=$5,460
Cash flow to creditor equals:
Amount repaid to suppliers minus new amount borrowed plus interest
$31,600 - $42,000 + $5,460
-$4,940
