Answer:
The total explicit cost and total implicit costs is $37,000 and $40,250 respectively.
Explanation:
Explicit cost : The explicit cost is that cost which is paid for day to day activities. Like : salaries expense, wages expense, rent, telephone expense, etc.
Implicit cost : The implicit cost is that cost which is related to the firm's growth. or it can be opportunity cost also.
So,
Total Explicit cost = Rent expense + Office supplies + Office staff + Telephone expense
= $12,000 + $1,000 + $ 20,000 + $ 4,000
= $37,000
And Total Implicit cost = Starting Salary + Savings
= $40,000 + $5,000 × 5%
= $40,250
Hence, the total explicit cost and total implicit costs is $37,000 and $40,250 respectively.
