Page | 1
Click here for more: Scholarsnexus - Stuvia US
Graded Homework - Chapter 9 Questions
with Detailed Verified Answers (100%
Correct Answers) /Already Graded A+
You own a small deli that sells sandwiches, salads, and soup. Which of the
following is an implicit cost of business?
a)wages paid to part-time employees
b)the job offer you did not accept at a local catering service
c)your monthly utility bill
d)bread, meat, and vegetables used to produce the items on your menu
Ans: the job offer you did not accept at a local catering service
Implicit Cost?
Ans: An implicit cost is any cost that has already occurred but is not
necessarily shown or reported as a separate expense. It represents an
opportunity cost that arises when a company allocates internal resources
toward a project without any explicit compensation for the utilization of
resources. This means that when a company allocates its resources, it always
forgoes the ability to earn money off the use of the resources elsewhere.
Examples of implicit costs include the loss of interest income on funds, and the
depreciation of machinery for a capital project. Implicit costs can also be
intangible costs that are not easily accounted for, such as situations in which an
owner allocates time toward the maintenance of a company, rather than
allocating those hours elsewhere. In most cases, implicit costs are not
recorded for accounting purposes.
, Page | 2
Click here for more: Scholarsnexus - Stuvia US
Suppose Eastland College does not have a summer program and could rent
out the campus to various summer sport camps for $100,000. The potential
revenue for the summer camps represents:
a)an explicit cost.
b)a sunk cost.
c)a total cost.
d) an implicit cost of capital.
Ans: An implicit cost of capital.
Explicit Cost
Ans: An explicit cost represents clear, obvious cash outflows from a business
that reduce its bottom-line profitability. This contrasts with less-tangible
expenses, such as goodwill amortization, which are not as clear cut regarding
their effects on a business's bottom-line value. Good examples of explicit costs
would be items such as wage expense, rent or lease costs as it is easy to see
the source of the cash outflow and the business activities to which the expense
is attributed.
Sunk Cost
Click here for more: Scholarsnexus - Stuvia US
Graded Homework - Chapter 9 Questions
with Detailed Verified Answers (100%
Correct Answers) /Already Graded A+
You own a small deli that sells sandwiches, salads, and soup. Which of the
following is an implicit cost of business?
a)wages paid to part-time employees
b)the job offer you did not accept at a local catering service
c)your monthly utility bill
d)bread, meat, and vegetables used to produce the items on your menu
Ans: the job offer you did not accept at a local catering service
Implicit Cost?
Ans: An implicit cost is any cost that has already occurred but is not
necessarily shown or reported as a separate expense. It represents an
opportunity cost that arises when a company allocates internal resources
toward a project without any explicit compensation for the utilization of
resources. This means that when a company allocates its resources, it always
forgoes the ability to earn money off the use of the resources elsewhere.
Examples of implicit costs include the loss of interest income on funds, and the
depreciation of machinery for a capital project. Implicit costs can also be
intangible costs that are not easily accounted for, such as situations in which an
owner allocates time toward the maintenance of a company, rather than
allocating those hours elsewhere. In most cases, implicit costs are not
recorded for accounting purposes.
, Page | 2
Click here for more: Scholarsnexus - Stuvia US
Suppose Eastland College does not have a summer program and could rent
out the campus to various summer sport camps for $100,000. The potential
revenue for the summer camps represents:
a)an explicit cost.
b)a sunk cost.
c)a total cost.
d) an implicit cost of capital.
Ans: An implicit cost of capital.
Explicit Cost
Ans: An explicit cost represents clear, obvious cash outflows from a business
that reduce its bottom-line profitability. This contrasts with less-tangible
expenses, such as goodwill amortization, which are not as clear cut regarding
their effects on a business's bottom-line value. Good examples of explicit costs
would be items such as wage expense, rent or lease costs as it is easy to see
the source of the cash outflow and the business activities to which the expense
is attributed.
Sunk Cost
