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3 years ago

What constitutes an implicit cost to the johnston manufacturing company?

Business

1 answer:

irakobra [83]3 years ago

4 0

Answer:

Interest on self funded capital , Self imputed salary of entrepreneur

Explanation:

Implicit Cost is the cost of business, which includes the imputed value of self owned factor services. No cash monetary exchange takes place for such costs, unlikely Explicit Costs (for which money factor payment is done). The implicit costs include the opportunity cost of all the factor services. It implies the cost of next best alternative of the factor services.

Examples

Interest on self funded capital , as it could have opportunity cost in terms of interest otherwise
Self entrepreneurial, managerial salary ; that reflects the opportunity cost in terms of salary that could be earned otherwise (skills employed somewhere else)

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The local baseball team owner hires you to help maximize the team's profits. You are told that costs are constant because enough

ozzi

Answer:

increase price per ticket.

Explanation:

increase price per ticket in proportion to cost incurred.

set up an internal control system to ensure all revenue from ticket are well accounted for.

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3 years ago

The total market value of the equity of ITM is $6 million, and the total value of its debt is $4

timofeeve [1]

Answer:

a. The required rate of return on Okefenokee stock is 16%.

b. WACC = 10.56%.

c. Estimate the discount rate for an expansion of the company's present business.

It should be the same as the WACC = 10.56%

d. The required rate of return on Okefenokee's new venture is Ke = 18 %.

Explanation:

Here the given is,

E = $6 million, D = $4 million, Beta = 1.2,

Rmp = the expected risk premium on the market =10%.

Rf = The Treasury bill rate = 4%

a. The required rate of return on Okefenokee stock,

$Ke = Rf + Beta \times Rmp = 4 + 1.2 \times 10 = 16%$ %.

b. Tax rate, T = 40%

The proportion of debt = $Wd = D / (D + E) = 4 / (6 + 4) = 0.4$

Proportion of equity, We = 1 - Wd = 1 - 0.4 = 0.6

Cost of debt, Kd = Risk-free rate as debt is free of default = 4%

$WACC = Wd \times Kd \times (1 - T) + We\times Ke\\\\ = 0.4 \times4\times (1 - 40) + 0.6 \times 16\\\\ = 10.56%$

WACC = 10.56%.

c. Estimate the discount rate for an expansion of the company's present business.

It should be the same as the WACC = 10.56%

d. Suppose the company wants to diversify into the manufacture of rose-colored glasses. The beta of optical manufacturers with no debt outstanding is 1.4. What is the required rate of return on Okefenokee's new venture? (You should assume that the risky project will not enable the firm to issue an additional debt)

$Ke = Rf + Beta \times Rmp\\\\Ke = 4 + 1.4 \times 10 = 18%$

Ke = 18 %.

5 0

3 years ago

At the beginning of the year, the balance in Allowance for Doubtful Accounts is a credit of $760. During the year, previously wr

Tom [10]

Answer:

Given:

Allowance for Doubtful Accounts is a credit of $760

Written off accounts = $120

Accounts totaling = $740

The end-of-year balance (before adjustment) in Allowance for Doubtful Accounts will be computed as:

Allowance for Doubtful Accounts - Accounts totaling + Written off accounts

⇒ $760 - $740 + $120

⇒ $140

therefore, the correct option is (c).

5 0

3 years ago

What is the best example of a factor that indicates the success of a corporation?

ludmilkaskok [199]

The best example of a factor that indicates the success of a corporation is its projected earnings. The earnings play a major role in characterizing a successful company. If earnings are stable, has positive growth, and reflects quality, then the corporation is successful.

6 0

3 years ago

Countries with more economic freedom during the past quarter of a century had a lower average per capita GDP.a. Trueb. False Cou

Sphinxa [80]

Answer:

a.False.

a.True.

Explanation:

It is correct to say that a country with more economic freedom during the last quarter of a century had a higher average GDP per capita than other countries with less freedom, this is due to the fact that the greater the economic freedom, the greater the economic growth of the country, which generates an increase in the country's productive capacity, increases demand, supply, the level of employability, the purchasing power of the population, which, integrated, these factors correspond to the increase in the country's quality of life, which increases the GDP per capita.

7 0

3 years ago