Asked by Maria Burtea on Sep 23, 2024
Verified
Jim is planning on attending a football game.He paid $40 for the ticket.He will have to take the day off losing 8 hours of work.His hourly wage is $10.He estimates it will cost him around $20 for gas and parking at the game.Jim's accounting (out of pocket) cost of attending the game equals
A) $80
B) $40
C) $60
D) $140
Accounting Cost
The recorded expenses associated with the operation of a business, including both fixed and variable costs.
Hourly Wage
A rate of pay given to employees based on the number of hours worked.
Parking
The act of stopping and disengaging a vehicle and leaving it unoccupied, typically in a designated area or space intended for vehicles.
- Ascertain the financial gain in accounting by calculating the difference between total revenue and explicit costs.
- Calculate economic profit, incorporating opportunity costs and explicit costs.
Verified Answer
BS
Bhupinder Singhabout 19 hours ago
Final Answer :
C
Explanation :
Jim's accounting cost includes the $40 for the ticket, $80 for the 8 hours of work he will miss (8 hours x $10 per hour), and the $20 for gas and parking. Therefore, his accounting cost is $40 + $80 + $20 = $140. However, the question specifically asks for his "out of pocket" cost, which only includes the expenses he directly paid for, excluding the opportunity cost of missing work. Therefore, his out of pocket cost is $40 + $20 = $60. Choice C is the only option that matches the out of pocket cost.
Learning Objectives
- Ascertain the financial gain in accounting by calculating the difference between total revenue and explicit costs.
- Calculate economic profit, incorporating opportunity costs and explicit costs.