Nick lives in Denver and operates a small company selling bikes. On average, he receives $833,000...
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Nick lives in Denver and operates a small company selling bikes. On average, he receives $833,000 per year from selling bikes. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $464,000. He also pays several utility companies, as well as his employees wages totaling $278,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $68,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Nick does not operate the bike business, he can work as a programmer and earn a yearly salary of $34,000 with no additional monetary costs, and rent out his storefront at the $68,000 per year rate. There are no other costs faced by Nick in running this bike company. Identify each of Nick's costs in the following table as either an implicit cost or an explicit cost of selling bikes. Implicit Cost Explicit Cost O O The wholesale cost for the bikes that Nick pays the manufacturer The salary Nick could earn if he worked as a programmer The wages that Nick pays The rental income Nick could receive if he chose to rent out his showroom C OOO Nick lives in Denver and operates a small company selling bikes. On average, he receives $833,000 per year from selling bikes. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $464,000. He also pays several utility companies, as well as his employees wages totaling $278,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $68,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Nick does not operate the bike business, he can work as a programmer and earn a yearly salary of $34,000 with no additional monetary costs, and rent out his storefront at the $68,000 per year rate. There are no other costs faced by Nick in running this bike company. Identify each of Nick's costs in the following table as either an implicit cost or an explicit cost of selling bikes. Implicit Cost Explicit Cost O O The wholesale cost for the bikes that Nick pays the manufacturer The salary Nick could earn if he worked as a programmer The wages that Nick pays The rental income Nick could receive if he chose to rent out his showroom C OOO
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Implicit Cost The salary Nick could earn if he worked as a programmer Explicit Cos... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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