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3 years ago

The table below provides the total revenues and costs for a dental practice for one year.

Business

1 answer:

RoseWind [281]3 years ago

5 0

Answer: 7.1 92000

7.2 70000

7.3 30000

7.4 -40000

Explanation:

7.1 Explicit cost means the cost which occurs to meet the expenses for the business operations

The explicit cost is calculated below.

Wages and salaries 700000

Interest on bank loan 50000

Cost supplies 150000

Depreciation 20000

Total Explicit cost $920000

7.2 Implicit cost means the opportunity cost that is foregone by investing in other type of investment. Implicit cost is not incurred by the business actually.

Risk free return 30000

Risk premium 40000

Total Implicit cost $70000

*7.3 The difference between the cost and the revenue provides the accounting profit of the firm.

Accounting Profit

= Revenue - Explicit Cost

=950000 - 920000

Total accounting profit firm= $30000

7.4 Economic profit means the profit arrived by the firm after deducted the total of explicit and implicit cost.

Economic Profit

=Revenue - (Explicit Cost + Implicit Cost)

=950000 - (920000 + 70000)

Total Economic Loss incurred= $-40000

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