Answer:
a. Accounting profit for the business = $3,500
b. Economic loss = $1,000
c. The two friends can open the business and incur economic loss of $1,000 in the first year of operation. In subsequent years, the revenue may increase to generate better economic profit. This is the labor, risk, and reward of entrepreneurship.
d. If the two friends do not go ahead with the business because of the economic loss they suffer in the first year of operation, then they cannot be regarded as entrepreneurs. They are merely laborers who cannot assume any risk for greater rewards tomorrow.
Explanation:
Cost of business per month:
Operating expenses = $4,000
Lease of building = 2,000
Total expenses = $6,000
Revenue = $10,000
Accounting profit $4,000
Economic profit:
Revenue = $10,000
Total expenses = $6,000
Opportunity costs:
Lost salaries 4,500
Lost Interest 500
Total costs $11,000
Economic loss = $1,000
Answer:
$38,000 loss
Explanation:
For calculation of entry to record the sale of the tractor first we need to determine the total depreciation and net book value on Jan 1, 2018 which is shown below:-
Total depreciation = (Tractor cost - Salvage value) × (Hours in 2016 + Hours in 2017) ÷ Hours of operation
= ($180,000 - $20,000) × (2,400 + 2,100) ÷ 10,000
= $72,000
Net book value on January 1, 2018 = Tractor cost - Total depreciation
= $180,000 - $72,000
= $108,000
Loss on sale = Sold tractor amount - Net book value on January 1, 2018
= $70,000 - $108,000
= $38,000
Answer:
1
Explanation:
Manufacturing Overhead sometimes also referred as Factory Overhead includes only those costs which are directly traceable to the production of a product i-e, Direct labor and Material Costs.
Answer:
the Merchandise Inventory will be credited by $3200
Explanation:
given data
Retail inventory = 800 units
recorded cost = $13
replacement cost = $ 9 per unit
selling price charged = $15
to find out
the Merchandise Inventory will be
solution
we know here market is equal to current replacement cost that is $9
and here we can say
market is here less than cost
so inventory will be valued at Market
so we find
down in inventory is = 800 × ( 13 - 9 )
down in inventory is = 3200
so the Merchandise Inventory will be credited by $3200
Answer:
the answer is b. increased
