Question

Babak owns a sports practice facility called Boston Batting Cages in Boston, Massachusetts. During the first year of operation, Boston Batting Cages incurred many costs. In that year, Babak spent $5,000 on labor, $2,000 on maintenance, and $1,000 on electricity. Babak took out a loan to open his business, in which he would have earned $1,500, and his previous job, which he could get back at any time, paid him $50,000.Boston Batting Cages incurred ________ in implicit costs.
a. $51,500
b. $9,500
c. $50,000
d. $8,000
e. $7,000

Answer 1

Answer:

$8000

Explanation:

They have to pay $8,000 as an implicit costs.

The implicit expenditure is the advantage of the right to use the personal resources of a company that is not listed as actual, distinct expenditures.

 Computation of Implicit cost for the Boston Batting Cage :

Implicit cost = Labor + maintenance + electricity

= $5,000 + $2,000 + $1,000

= $,8000