1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Sonbull [250]
2 years ago
14

Brian lives in Chicago and runs a business that sells pianos. In an average year, he receives $793,000 from selling pianos. Of t

his sales revenue, he must pay the manufacturer a wholesale cost of $430,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Brian does not operate this piano business, he can work as a financial advisor and receive an annual salary of $50,000 with no additional monetary costs. No other costs are incurred in running this piano business.
Identify each of Brian's costs in the following table as either an implicit cost or an explicit cost of selling pianos.
Implicit Cost Explicit Cost
The wages and utility bills that Brian pays
The rental income Brian could receive if he chose to rent out his showroom
The salary Brian could earn if he worked as a financial advisor
The wholesale cost for the pianos that Brian pays the manufacturer
Complete the following table by determining Brian's accounting and economic profit of his piano business.
Profit
(Dollars)
Accounting Profit
Economic Profit
Business
1 answer:
umka21 [38]2 years ago
8 0

Answer:

Brian

1. Implicit and Explicit Costs:

Implicit costs:

The rental income Brian could receive if he chose to rent out his showroom

The salary Brian could earn if he worked as a financial advisor

Explicit costs:

The wages and utility bills that Brian pays

The wholesale cost for the pianos that Brian pays the manufacturer

2. Brian's accounting and economic profit of his piano business:

Accounting profit = $62,000

Economic profit (loss) = ($3,000)

Explanation:

a) Data and Calculations:

                               Accounting Profit     Economic Profit

Sales Revenue            $793,000                $793,000

Cost of pianos              430,000                   430,000

Wages and utility bills   301,000                    301,000

Implicit (Opportunity) Costs:

Rent                                                                   15,000

Salary as an accountant                                  50,000

Total costs                    731,000                    796,000

Profit (loss)                  $62,000                     ($3,000)

b) Implicit costs are opportunity costs.  They include the costs that arise from forgone benefits when another opportunity is taken instead of the other.  Explicit costs are costs that are actually incurred by taking an opportunity.

You might be interested in
A The management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is ave
Zepler [3.9K]

Answer:

Gresa Inc.

Comparative Condensed Income Statements for 2017

under FIFO and LIFO.

                                                                  <u>  FIFO                               LIFO</u>

Sales                                                          1176450                    1176450

Cost Of Goods Sold                                 660,400                    657, 200

Gross Profit                                               516050                    539,500

Operating  Expense                                  $ 150,000               $ 150,000

Income before Tax                                      $ 366,050             $ 389500

Income Tax  (30%)                                       <u> $ 109815                  $ 116850</u>

<u>Net Income                                                     $  256235  $272650</u>

<em><u>Working :</u></em>

<em><u>Fifo Cost of Goods Sold= $ 10,000 +  $168,000 +  $ 150,000+ 156,000 + 176,400= </u></em>

<em><u>Lifo Cost of Goods Sold= $ 224,000 + 156,000+  $ 150,000+127,200</u></em>

Purchases were made quarterly as follows.

Quarter     Units         Unit Cost        Total Cost

1               70,000       $2.40             $168,000

2             60,000        2.50               150,000

3             60,000         2.60              156,000

4             80,000          2.80               224,000

                270,000                            $698,000

Inventories    Beginning (5,000 units)    $10,000          

Total net sales (253,000 units)  $1,176,450

Ending (22,000 units)

Total cost of goods purchased (270,000 units) 698,000

3 0
3 years ago
Accounting is the information system that A. processes information into reports. B. measures business activity. C. communicates
Natalka [10]

Answer:

The correct answer is letter "D": All of the above.

Explanation:

Accounting is the activity by which the economic transactions of a company are registered in ledgers that together form a group where information is recorded to be summarized at the end of an accounting period in Financial Statements. That report is useful for top managers since they can make decisions about what the firm should implement or replace to maximize the firm's resource allocation and profits.

8 0
3 years ago
The main function of the Federal Reserve System is to:
PolarNik [594]

Answer:

D. Serve as the fiscal agent for the Federal government

Explanation:

The Federal Reserve System (FRS) is the central bank of the United States. FRS regulates the U.S. monetary and financial system.

The functions of Federal Reserve System includes;

1. conducting the nation's monetary policy

2. regulating banking institutions

3. monitoring and protecting the credit rights of consumers

4. maintaining the stability of the financial system

5. providing financial services to the U.S. government.

4 0
3 years ago
A _____ is used for goods that must be produced at a specific site or that are so large and bulky that it isn't feasible to move
12345 [234]

Answer:

fixed position

Explanation:

A fixed position layout is where a product to be produced remains in a certain spot or location but the workers needed to work on the product , including machinery are moved to the place where the product is to be produced as at when required. This is because there may be limited space at the project site, hence component parts of the product to be manufactured are then coupled at other site and taken to the product site.

An example of fixed layout is the construction of dams, shipbuilding, buildings etc. A fixed position layout is most suited for heavy and fragile products.

6 0
3 years ago
flora Quinton is buying a new air compressor for her auto repair shop. it sells for $1,299. She makes a down payment of $199 and
Luba_88 [7]
I believe the answer is $1,100
3 0
3 years ago
Other questions:
  • Compute the impact on the money multiplier of an increase in the currency-to-deposit ratio from 10 percent to 15 percent when th
    6·1 answer
  • During what stage of product development are production costs estimated
    11·1 answer
  • All of the following costs are likely to decrease as a result of better quality EXCEPT: a. customer dissatisfaction costs. b. in
    9·1 answer
  • An egoist who believed the right goals or actions are the ones that ensure survival
    5·1 answer
  • Orlando has a bank statement balance of $414.25 and $5.90 service charge. His check register shows $374.16 and he has two outsta
    11·1 answer
  • On November 1, 2021, New Morning Bakery signed a $191,000, 6%, six-month note payable with the amount borrowed plus accrued inte
    10·1 answer
  • For accounting errors, which of the below sentences is true?
    10·1 answer
  • Carlos has a small fashion company. He has been in business for a little over a year and the company looks like it is going to d
    10·2 answers
  • If you were running a marathon which type of muscle fibers.
    15·1 answer
  • Updating accounts receivable is part of which transaction cycle?
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!