Asked by kyaira jackson on May 20, 2024
Verified
Given: Sales of $14 million;implicit costs of $3 million;and explicit costs of $12 million.Find (a)accounting profit;and (b)economic profit.
Sales
Sales refer to the transactions where goods or services are exchanged for money, reflecting the revenue generating activities of a business.
Implicit Costs
The opportunity costs that are not directly paid for in cash but represent the loss of alternative benefits when resources are used for a particular purpose.
Explicit Costs
Direct, out-of-pocket payments for goods and services that are used in the production of other goods or services.
- Compute both accounting and economic gains using the provided financial figures.
Verified Answer
CG
Courtney GreenMay 23, 2024
Final Answer :
Sales ($14 million)- Explicit Costs ($12 million)= Accounting Profit ($2 million).Accounting Profit ($2 million)- Implicit Costs ($3 million)= Economic Profit (-$1 million),or Economic Loss of $1 million.
Learning Objectives
- Compute both accounting and economic gains using the provided financial figures.