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Drupady [299]
3 years ago
8

Jim left his previous job as a sales manager and started his own sales consulting business. He previously earned $70,000 per yea

r, but he now pays himself $25,000 per year while he is building the new business. What is the economic cost of the time he contributes to the new business?
Business
1 answer:
emmainna [20.7K]3 years ago
8 0

$45,000 per year is the economic cost of the time he contributes to the new business.

<h3><u>Explanation:</u></h3>

The difference between the accounting cost and the implicit cost refers to the economic cost. Implicit cost refers to the opportunity cost that the person incurs when he makes a choice. For example consider Geetha is spending something for watching a movie. The cost that she spends for the movie and the cost that can be forgone by her when she spends that for some other things will be included in the economic cost.

In the example given Jim  was earning d $70,000 per year and now he is paying himself  $25,000 per year for building a new business. Thus the economic cost will be $70,000 -$25,000 = $45,000 per year. Here the accounting cost is  $70,000  and the implicit cost is $25,000.

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It can also be written as:

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2 years ago
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4 0
3 years ago
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NARA [144]

Klamath corporation has insufficient information to find ROE.

Return on equity (ROE) is the degree to of an agency's internet earnings are divided by using its shareholders' equity. ROE is a gauge of a corporation's profitability and how successfully it generates one's income. The better the ROE, the higher an employer is at changing its fairness financing into income.

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4 0
2 years ago
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6 0
3 years ago
Fairfield company's raw materials inventory transactions for the most recent month are summarized here: beginning raw materials
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4 0
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