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Determining the production costs

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Reference no: EM131373023

"Production Costs" Please respond to one of the following:

  • You are the owner of a fast-food restaurant. Given a new item that you recently advertised, you experience additional demand for your business that you do not want to ignore. Identify your fixed and variable costs at your fast-food restaurant, and explain the changes to each of these costs given the increased demand.
  • Consider the table below:

Economic Versus Accounting Costs

Item:

 Cost

Total annual labor cost (the business owner does not draw a salary) 

$160,000.00

Total annual cost of materials used in production

$250,000.00

Annual expenditure on rent, utilities, taxes, insurance, and misc. expenses

$90,000.00

The business owners' previous annual salary when he worked for someone else

$85,000.00

The business owner's annual interest income before sinking all of his funds into this business

$15,000.00

What is the Accounting Cost of operating this business? What is the Economic Cost?  Why do they differ?

Reference no: EM131373023

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