Calculate explicit and implicit cost

Reference no: EM1374647

1. Sally is planning opening her own new beauty salon. She anticipates the following expenses per year:

Furniture: $20,000 Additionally, Sally is withdrawing $34,000 from her savings account that pays 4 percent interest per year to buy the furniture and equipment; she will quit her current job that pays $25,000 per year. She expects total revenues from the new business in the first year to be $70,000. Calculate the following:
Equipment: $14,000
Rent: $12,000
Coloring products: $6,000
Styling products: $4,000

a. Explicit costs (list the items).

b. Implicit costs (list the items).

c. Accounting profit.

d. Economic profit.

e. Given this first-year information only, should Sally open a salon?

2. State whether the following decision is a short-run or long-run decision:

a. ADM is deciding whether to install machinery that uses Human Machine Interface technology or 8-layer PCB prototype technology in its manufacturing plant.

b. Wal-Mart hires additional seasonal workers during November and December.

c. Bassett furniture manufacturers close all manufacturing plants in North Carolina, USA and outsource their furniture production to manufacturing plants in China.

d. General Motors purchases new equipment to replace depreciating equipment.

Reference no: EM1374647

Questions Cloud

Demand is supposed to depend on the price : A manufacturer of mp3 players is making to set the price on a new model. Demand is supposed to depend on the price and is represented by the model

Illustrate what do you see pros and cons of such agreement : Do you think Bharti should enter outsourcing agreements outlined by Gupta. Illustrate what do you see as pros and cons of such agreements. Explain how do different outsourcing agreements work towards building se core competencies.

Is training continuously an effective solution : Describe what is the author's main point? Is training continuously an effective solution? Why, or why not? What suggestion supports the main point?

Explain how a decrease in setup time can lead to a decrease : Explain how a decrease in setup time can lead to a decrease in average amount of inventory an industry holds. Illustrate what do you think. Under illustrate what conditions (if any) should a business install a forced-distribution rating system for ..

Calculate explicit and implicit cost : Sally is planning opening her own new beauty salon. She anticipates the following expenses per year, Furniture: $20,000 Additionally, Sally is withdrawing $34,000

The us congress as well as president pass a controversial : I am running a large countrywide business that has its headquarters in Texas. After the US Congress as well as President Pass a controversial employment law

Illustrate what situations would we need to track values : Illustrate what are some of individual data items collected as part of earned value table. Illustrate what does information tell us and in illustrate what situations would we need to track values.

Determine number of teams of painters amanda needs to hire : Determine number of teams of painters Amanda needs to hire so that customers will have to wait no longer than 2 weeks to get their houses painted.

Which phase in the communication process : Which phase in the communication process do you consider to be the most important? Why do you think this? Which of these phases

User Account

All Pages