Answer:
a. explicit cost
b. explicit cost
c. implicit cost
d. implicit cost
Explanation:
Explicit costs can be defined as the actual costs incurred to run the business like supplies, utilities, materials or wages, while implicit costs can be defined as the opportunity cost of running the business like the potential salary of working in another job or the possible revenue of renting the current operating location.
a. The wages and utility bills that Sam' pays - explicit cost (actual costs)
b. The wholesale cost for the guitars that Sam' pays the manufacturer - explicit cost (actual costs)
c. The rental income Sam' could receive if he chose to rent out his showroom - implicit cost (potential revenue lost)
d. The salary Sam' could earn if he worked as a financial advisor - implicit cost (potential revenue lost)
Answer:
The answer is B. is designed to match revenues and expenses.
Explanation:
Accrual Accounting method records revenues and expenses when they are incurred, regardless of when cash is received or paid.
Complete Question: Many banks and phone companies now charge fees for once-free services to ensure minimum customer revenue levels. This helps the banks to ________.
A) reduce the rate of customer defection
B) make low-profit customers more profitable
C) enhance the growth potential for each customer through cross-selling
D) increase the longevity of the customer relationship
E) focus disproportionate effort on high-value customers
Answer:
B) make low-profit customers more profitable
Explanation:
Many banks and phone companies now charge fees for once-free services to ensure minimum customer revenue levels. This helps the banks to make low profit customers more profitable.
The basic logic behind this strategy is that when customers find something coming free, then they start taking it for granted, they don't pay much attention to it, therefore, when the some services are free, customers will not be spending much on them, like upgrading, monthly plan up-gradations, monthly or annual subscriptions. Consequently, to turn the those customers into highly valuable customers, companies charge for the services which were free of cost in the past.
Sell the asset, which will drive down the price and cause the expected return to reach the level of the required return.
