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
Ainat [17]
3 years ago
7

Brian lives in Denver and runs a business that sells pianos. In an average year, he receives $704,000 from selling pianos. Of th

is sales revenue, he must pay the manufacturer a wholesale cost of $404,000. He also pays wages and utility bills totaling $286,000. He owns his showroom; if he chooses to rent it out, he will receive $3,000 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 an accountant and receive an annual salary of $20,000 with no additional monetary costs. No other costs are incurred in running this piano business.
1. 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 wholesale cost for the pianos that Brian pays the manufacturer
The salary Brian could earn if he worked as an accountant
The wages and utility bills that Brian pays
The rental income Brian could receive if he chose to rent out his showroom
2. Complete the following table by determining Brian's accounting and economic profit of his piano business.

Profit $
Accounting Profit
Economic Profit
If Brian's goal is to maximize his economic profit, should he stay in the piano business or rather work as an accountant?
Business
1 answer:
Yakvenalex [24]3 years ago
8 0

Answer:

Explicit cost :

The wholesale cost for the pianos that Brian pays the manufacturer

The wages and utility bills that Brian pays

Implicit cost:

The salary Brian could earn if he worked as an accountant

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

Accounting profit = $14,000

Economic profit = $-9,000

He should stop selling painos. He should work as an accountant

Explanation:

Explicit cost is total actual cost incurred in running a business.

Implicit cost is the opportunity cost of running the piano business. It is the cost of the next best option forgone when one alternative is chosen over other alternatives.

Accounting profit = Total revenue - Total explicit cost

Total revenue = $704,000

Total explicit cost = $404,000 + $286,000 = $690,000

Accounting profit = $704,000 - $690,000 = $14,000

Economic profit is accounting profit less implicit cost or opportunity cost.

Economic profit = Accounting profit - Opportunity cost

Opportunity cost = $20,000 + $3,000 = $23,000

Economic profit = $14,000 - $23,000 = $-9,000

He should work as an accountant instead since his economic profit is negative. He would earn more working as an accountant than selling pianos

I hope my answer helps you.

You might be interested in
What term dd thorstein veblen use to describe the fundmental change in people's orientation to the economy?
Sedbober [7]

Conspicous Consumption was the term used by thorstein veblen to describe fundamental change in people's orientation to the economy.

Who was Thorstein Veblen?

Thorstein Veblen was a famous sociologist and economist who wrote the book The Theory of the Leisure Class. He wrote about the relationship between the economy, culture, and society.

Conspicuous consumption is the act of acquiring things or services specifically with the intention of flaunting one's affluence. When publicly displayed products and services are too expensive for other people in a person's class, conspicuous consumption is a way to demonstrate one's social position. Although it is frequently associated with the wealthy, this type of consumerism can occur in any income class.

The complete question is :

What term did Thorstein Veblen use to describe the fundamental change in people's orientation to the economy from producing goods to using them?

To learn more about Conspicous Consumption visit the link:

brainly.com/question/14546547?referrer=searchResults

#SPJ4

6 0
2 years ago
1. Sam is preparing a speech for a small church group. He makes a list of his interests and lists all the related jobs he knows.
sineoko [7]

Answer:

Topic Building

Explanation:

Sam is at this point trying to build his topic for the speech.

It is based on this topic a speech write up will be made.

6 0
3 years ago
Read 2 more answers
Alpha Company manufactures Product P and sells it in packs of 10 units. The actual results for the first week in January are as
kaheart [24]

Answer:67500

The right solution is "13,675 U".

Explanation:

According to the question,

The standard material cost will be:

= 25000\times (\frac{90000}{30000} )\times 0.90

= 25000\times 30000\times 0.90

= 67,500

The actual material cost will be:

= 95500\times 0.85

= 81,175

hence,

The total material price variance will be:

= Actual \ cost - Standard \ cost

= 81175-67500

= $13,675 (Unfavorable)

3 0
2 years ago
QS 11-9 Recording warranty repairs LO P4 On September 11, 2016, Home Store sells a mower for $490 cash with a one-year warranty
prisoha [69]

Answer:

<em>On September 11, 2016, Home Store sells a mower for $490 cash with a one-year warranty that covers parts</em>

<u>Recording of revenue:</u>

Cash $490 (debit)

Revenue $490 (credit)

<u>Recording of Warranty granted :</u>

Assurance Warranty expense $49.00 (debit)

Warranty Provision $49.00  (credit)

$490 × 10% = $49.00

<em>On July 24, 2017, the mower is brought in for repairs covered under the warranty requiring $34 in materials taken from the Repair Parts Inventory</em>

<u>When warranty is subsequently received:</u>

Warranty Provision $ 34 (debit)

Repair Parts Inventory $ 34 (credit)

Explanation:

<em>On September 11, 2016, Home Store sells a mower for $490 cash with a one-year warranty that covers parts</em>

<u>Recording of revenue:</u>

Cash $490 (debit)

Revenue $490 (credit)

<em>We Recognise Revenue to depict transfer of control of mower</em>

<u>Recording of Warranty granted :</u>

Assurance Warranty expense $49.00 (debit)

Warranty Provision $49.00  (credit)

$490 × 10% = $49.00

<em>There is no option for customer to take the warranty or not, so this is a service warranty.The warranty is measured at the best estimate of expenditure required to settle the obligation that is at 10% of sales.</em>

<em>On July 24, 2017, the mower is brought in for repairs covered under the warranty requiring $34 in materials taken from the Repair Parts Inventory</em>

<u>When warranty is subsequently received:</u>

Warranty Provision $ 34 (debit)

Repair Parts Inventory $ 34 (credit)

<em>Utilise the Warranty Provision when the warranty claim is subsequently received</em>

<em></em>

7 0
3 years ago
A straight-line production possibilities frontier assumes Group of answer choices the more resources a society uses to produce o
liubo4ka [24]

Answer:

the opportunity cost of producing a good is constant as more and more of that good is produced

Explanation:

In the case of the  production possibilities frontier i.e. on the straight line presumes that the opportunity cost for generating the good should be the similar or constant when the more and more goods are generated or produced

So as per the given options, the above statement should be selected

And, the same is to be relevant

5 0
2 years ago
Other questions:
  • Marsh, inc. paid for freight costs on merchandise it shipped to a customer. in what account will marsh record this cost in a per
    5·1 answer
  • What strategy of modern manufacturing is Adam Smith referring to in this statement? "To take an example, therefore, from a very
    13·1 answer
  • How does buying a plant asset affect general ledger accounts
    14·1 answer
  • Which of the following statements are false?
    11·1 answer
  • The right to receive money in the future is called
    10·2 answers
  • The minimum feasible​ long-run average cost for firms in a perfectly competitive industry is ​$48 per unit. If every firm in the
    8·1 answer
  • For customers purchasing a refrigerator at a certain appliancestore, let A be the event that the refrigerator wasmanufactured in
    14·1 answer
  • Segment Contribution Margin Analysis The operating revenues of the three largest business segments for Time Warner, Inc., for a
    11·1 answer
  • Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the be
    6·1 answer
  • Credit score is used to determine your financial worth ?
    6·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!