Asked by
Ankit Karody
on Dec 19, 2024
Verified
The following is cost information for the Creamy Crisp Donut Company.Entrepreneur's potential earnings as a salaried worker = $48,000Annual lease on building = $20,000Annual revenue from operations = $280,000Payments to workers = $118,000Utilities (electricity, water, disposal) costs = $8,000Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000Entrepreneur's forgone interest on personal funds used to finance the business = $6,000Creamy Crisp's explicit costs are
A) $280,000.
B) $146,000.
C) $0.
D) $152,000.
Explicit Costs
Direct, out-of-pocket payments for costs of production, such as wages, rent, and materials.
Entrepreneur's Potential Earnings
The forecasted income an entrepreneur can expect from their business venture, taking into account risks and opportunities.
Annual Lease
A contract for the rental of property, typically real estate, that lasts for one year.
- Acquire insight into the contrast between explicit and implicit costs, alongside normal profit.
Verified Answer
VZ
Learning Objectives
- Acquire insight into the contrast between explicit and implicit costs, alongside normal profit.