Reference no: EM132607460
Revenues Revenue from sales of goods and services .................................... $80,000,000
Operating costs and expenses:
Cost of products and services sold................................................. $30,000,000
Selling expenses ............................................................................ $3,000,000
Administrative expense ................................................................. $4,000,000
Total operating costs and expenses......................................... $37,000,000
Income from operations........................................................................ $43,000,000
Interest expense (corporate bonds & loans).......................................... $300,000
Non-recurring expense (Legal expenses/fines in settling a federal antitrust suit)....................................................... $200,000
Income taxes......................................................................................... $700,000
Net income............................................................................................ $41,800,000
Quest Realty income statement is given above. During this year of operation, Quest Realty owned and occupied an office building in downtown Indianapolis. For this year, the building could have been leased to other businesses for $2,000,000 in lease income. Quest Realty also owned undeveloped land valued at $15,000,000. Owners of Quest Realty can earn a 14% rate of return annually on funds invested elsewhere.
Question a. Calculate total explicit costs of using market-supplied resources for Quest Realty for this year
Question b. Calculate total implicit costs of using owner-supplied resources for Quest Realty for this year
Question c. Calculate Quest's accounting profit
Question d. Calculate Quest's economic profit