Answer:
a. not only costs and revenues, but also assets invested in the center
Explanation:
A profit centre is defined as a segment of a company that is a standalone and determines the profit and losses of the entire company which are calculated seperately.
It also generates it's earnings and revenues independently.
The opposite of the profit centre is called the cost centre that does not earn any revenue but rather consumes revenue from other departments.
The profit centre also determines allocation of resources to various activities in the future.
When production is greater than sales ______ affected. Multiple choice question. only the fixed production cost variance is only the variable production cost variance is both the fixed production cost and variable production cost variances are neither the fixed production cost or variable production cost variances are
variable costing will show higher net income than the absorption costing
What is the name of the document that comes with your paycheck and shows you what you were paid and how much was taken for taxes?
Form W-2
Explanation:
Consider a market with two firms, Kellogg and Post, that sell breakfast cereals. Both companies must choose whether to charge a high price ($) or a low price ($) for their cereals. These price strategies, with corresponding profits, are depicted in the payoff matrix to the right. Kellogg's profits are in red and Post's are in blue. What is the cooperative equilibrium for this game?
Answer:
Both the two companies to choose a price of $4.50
Explanation:
Based on the information given we were told that the two companies have to choose whether they will charge either a price that is high or a price that is low for their cereals which means that the two companies COOPERATIVE EQUILILBRIUM for this game is that both the two companies have to choose a price of the amount of $4.50 which represent the high price.
Which could argue that a programmer deserves to have his/her work protected by a copyright purely as a result of his/her inalienable right to try to reap the benefits from his/her labor?
Answer:
What
Explanation:
On April 1, Dallow, Inc. factored $160,000 of its accounts receivable without recourse. The factor retained 10% of the accounts receivable as an allowance for sales returns and charged a 5% commission on the gross amount of the factored receivables. What amount of cash did Dallow receive from the factored receivables
Answer:
$136,000
Explanation:
According to the scenario, computation of the given data are as follows,
Amount receivable = $160,000
Allowance for sales return = 10% × $160,000 = $16,000
Commission = 5% × $160,000 = $8,000
So, amount of cash from factored receivables can be calculated by using following formula,
Cash from factored receivables = Amount receivable - Allowance for sales return - Commission
= $160,000 - $16,000 - $8,000
= $136,000
Prepare an amortization schedule for a three-year loan of $66,000. The interest rate is 11 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan?
Answer:
Interest = 15,024.18 Amortization Payment = 27008.06 per year
Explanation:
A = P * [ r(1+r)^n / ((1+r)^n - 1) ]
P = 66000
r = 11% = 0.11
n = 3
A = 66000 * [ 0.11(1.11)^3 / (1.11^3 - 1) ]
A = 27008.06
Total Payment = A * n = 27008.06 * 3
Total Payment = 81,024.18
Interest = Total Payment - P = 81024.18 - 66000
Interest = 15024.18
Minors are liable for the reasonable value of the necessary:______.
a. actually furnished.
b. that they agreed to purchase.
c. that their parents agreed to pay for.
d. all of these.
Answer:
b. that they agreed to purchase.
Explanation:
A minor is a person who is under the age of 18 and unable to make decision on his own such as mentally impaired or incompetent persons .
A minor cannot enter a contract like adults but if under any circumstance they enter into a contract of sale purchase of daily goods like clothing etc, they are liable to pay the price which they agreed to pay.
Their parents are liable only if the contract was made according to the parent's will etc.
If the minor is unable to pay the agreed amount then the minor should return the goods or fulfill any other liability as imposed by the court of law.
Kennedy Inc. has the following data for its operation in August: Increase in direct materials inventory 100 Sets Direct materials purchased (AQ) 1,600 Sets Finished goods manufactured 700 units Direct materials purchase-price variance $ 400 Favorable Budgeted Finished goods to manufacture 800 Units Direct materials purchases 2,000 Sets Direct materials per unit of finished goods 2 Sets Direct materials price per set (SP) $ 3.60 What was the actual purchase price (AP) per set of direct materials purchased (to two decimal places)
Answer:
Actual price= $1.6 per unit
Actual price= $3.2 per set
Explanation:
To calculate the actual price, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
400= (1.8 - actual price)*2,000
400= 3,600 - 2,000actual price
2,000actual price = 3,200
actual price= $1.6 per unit
Suppose the following transactions occur during 2018. 1. Waddah, a liquor store owner in the United States, buys 80 bottles of wine from a French vineyard at a price of $30 per bottle. 2. Autozone, a U.S. company, sells 200 spark plugs to a South Korean car company at $3.50 per spark plug. 3. Taylor, a U.S. citizen, pays $350 for a snowboard he orders from Arrieta White Mountain Supplies (a U.S. company). Based on these transactions, U.S. net exports (NX) in 2018 is $ ____ . [Note: If your answer is negative don't forget to enter a minus sign]
Answer: -$1,700
Explanation:
The Net exports are to be calculated by deducting imports into the U.S. from Exports to other countries from the U.S.
Exports:
2. Autozone, a U.S. company, sells 200 spark plugs to a South Korean car company at $3.50 per spark plug.
Imports
1. Waddah, a liquor store owner in the United States, buys 80 bottles of wine from a French vineyard at a price of $30 per bottle.
= Exports - Imports
= (200 * 3.50) - [80 * 30]
= -$1,700
The third transaction is neither an import nor an export as it was conducted entirely in the U.S.
Using the liquidity-preference model, when the Federal Reserve decreases the money supply, a. the equilibrium interest rate increases. b. the aggregate-demand curve shifts to the right. c. the quantity of goods and services demanded is unchanged for a given price level. d. the short-run aggregate-supply curve shifts to the left.
Answer:
A
Explanation:
When the fed increases money supply it is known as expansionary monetary policy. the excess of supply over demand leads to a fall interest rate
During 2019, Coronado Industries expected Job No. 26 to cost $300000 of overhead, $500000 of materials, and $200000 in labor. Coronado applied overhead based on direct labor cost. Actual production required an overhead cost of $370000, $610000 in materials used, and $260000 in labor. All of the goods were completed. What amount was transferred to Finished Goods?
Answer:
See below
Explanation:
Given the above information, first we will compute the predetermined overhead rate
Predetermined overhead rate
= Estimated manufacturing overhead / Estimated labor
= $300,000/$200,000
= 1.5
The next step is to apply the
= [(1.5 × $260,000) + $260,000 + $610,000]
= $390,000 + $260,000 + $610,000
= $1,260,000
A company had total liabilities of $275,000 and the owner’s equity was $1,722,000. According to the fundamental accounting equation, total assets must be:
Answer:
1,997,000
Explanation:
Assets = Liabilities + Owners Equity
Assets=275,0000 + 1,722,000
Assets = 1,997,000
Which of the following is incorrect?
a. Future value means earning interest on interest.
b. External equity and dividends can be used as plug variables in a financial plan.
c. A financial plug variable is the designated source of external financing needed to deal with any shortfall or surplus in financing and thereby bring the balance sheet into balance.
d. There are two primary mechanisms for electing directors: cumulative voting and straight voting.
e. The rate required in the market on a bond is the yield to maturity.
Answer:
b. External equity and dividends can be used as plug variables in a financial plan.
Explanation:
When the external equity and dividend is applied like the plus variables in the financial plan so as a plug variable it represent the external financing source i.e. dividend that required to deal with any deficit or surplus in the financing and the external equity is not a source of the external financing
Therefore the option b is considered
Imagine that you are holding 5,300 shares of stock, currently selling at $40 per share. You are ready to sell the shares but would prefer to put off the sale until next year due to tax reasons. If you continue to hold the shares until January, however, you face the risk that the stock will drop in value before year-end. You decide to use a collar to limit downside risk without laying out a good deal of additional funds. January call options with a strike price of $45 are selling at $3, and January puts with a strike price of $35 are selling at $4. What will be the value of your portfolio in January (net of the proceeds from the options) if the stock price ends up at $28, $40, $48
Answer:
A. $180,200
$148,400
B.$206,700
$212,000
C. $233,200
$254,400
Explanation:
A. Calculation to determine the value of your portfolio in January and the value of your portfolio if you simply continued to hold the shares
STOCK PRICE $28
First step is to calculate the Value at expiration Using this formula
Value at expiration = Value of call + Value of put + Value of stock
Let plug in the formula
Value at expiration= $0 + ($35 - $28) + $28
Value at expiration= $35
Now let calculate the total net proceeds
Using this formula
Total net proceeds=(Final value - Original investment) × numbers of shares
Total net proceeds= ($35 - $1) × 5,300
Total net proceeds= $180,200
Calculation to determine the Net proceeds without using collar
Using this formula
Net proceeds without using collar = Stock price × Number of shares
Let plug in the formula
Net proceeds without using collar= $28 × 5,300 Net proceeds without using collar= $148,400
Therefore the value of your portfolio in January is $180,200 and the value of your portfolio if you simply continued to hold the shares is $148,400
B. STOCK PRICE= $40
First step is to calculate the Value at expiration using this formula
Value at expiration = Value of call + Value of put + Value of stock
Let plug in the formula
Value at expiration= 0 + 0 + $40
Value at expiration= $40
Now let calculate the total net proceeds
Using this formula
Total net proceeds=(Final value - Original investment) × numbers of shares
Total net proceeds= ($40 - $1) × 5,300
Total net proceeds= $206,700
Calculation to determine the Net proceeds without using collar
Using this formula
Net proceeds without using collar = Stock price × number of shares
Let plug in the formula
Net proceeds without = $40 × 5,300
Net proceeds without= $212,000
Therefore the value of your portfolio in January is $206,700 and the value of your portfolio if you simply continued to hold the shares is $212,000
C. STOCK PRICE $48:
First step is to calculate the Value at expiration using this formula
Value at expiration = Value of call + Value of put + Value of stock
Let plug in the formula
Value at expiration= ($45 - $48) + 0 + $48
Value at expiration = $45
Now let calculate the total net proceeds
Using this formula
Total net proceeds=(Final value - Original investment) × Numbers of shares
Total net proceeds= ($45 - $1) × 5,300
Total net proceeds= $233,200
Calculation to determine the Net proceeds without using collar
Using this formula
Net proceeds without using collar= Stock price × Number of shares
Let plug in the formula
Net proceeds without using collar= $48 × 5,300
Net proceeds without using collar= $254,400
Therefore the value of your portfolio in January is $233,200 and the value of your portfolio if you simply continued to hold the shares is $254,400
last year, cayman corporation had sales of $26 million, total variable costs of $15 million, and total fixed costs of $5,000,000. in addition, they paid $4 million in interest to bondholders. cayman has a marginal tax rate of 21 percent. if cayman's sales increase by 15%, what should be the increase in operating income
Answer:
Cayman Corporation
The increase in operating income is 27.5% (or $1.65 million).
Explanation:
a) Data and Calculations:
Sales last year = $26 million
Total variable costs 15 million
Contribution margin $11 million
Fixed costs 5 million
Operating income $6 million
Bondholders' interest 4 million
Income before tax $2 million
Income taxes (21%) 0.42 million
Net income $1.58 million
Last Year Increase by 15%
Sales revenue = $26 million $29.9 million
Total variable costs 15 million 17.25 million
Contribution margin $11 million $12.65 million
Fixed costs 5 million 5.0 million
Operating income $6 million $7.65 million $1.65 m or 0.275
Bondholders' interest 4 million 4.0 million
Income before tax $2 million 3.65 million
Income taxes (21%) 0.42 million 0.7665 million
Net income $1.58 million 2.8835 million = 82.5%
A trial balance before adjustment included the following:
Debit Credit
Accounts receivable $133,000
Allowance for doubtful accounts $1,080
Sales 471,000
Sales returns and allowances 5,200
Required:
Prepare journal entries assuming that the estimate of uncollectible is determined by taking (1) 4% of gross accounts receivable.
A company issues the following bonds on June 1, 2002. Series A (counts as two) Series B $50 million BBB June 1, 2030 June 1, 2008 100 Par Value Rating Maturity Call date Call price $50 million BBB June 1, 2030 Non-callable -- If both bonds have the same market liquidity, the yield-to-maturity on the Series A bond should be [ ] than yield-to-maturity on Series B bond. a) higher b) lower c) the same d) either higher or lower(depending notherfactors)
Answer: a. Higher
Explanation:
Series A is a callable bond which means that the company will be able to buy it back after a certain period of time at a price dictated in the contract.
This provision is an advantage to the Issuer but not the investors so the Issuer will have to pay the investors more to get them to buy the bond even with the presence of this provision.
This additional payment will come in the form of a higher yield. This is why callable bonds have higher yields than non-callable comparable bonds.
Desert Company issued $3,158,061 of 12% bonds on January 1, 2021. The market rate of interest at that time was 9%. The bonds pay interest quarterly each March 31, June 30, September 30, and December 31. What is the amount of the cash payment Desert is legally obligated to pay its creditor each quarter?
Answer:
Quarterly Interest Payment = $94741.83
Explanation:
The amount of interest payment made by coupon bonds depends on the coupon rate they carry regardless of what the interest rate in market is. Thus Desert will have to pay annual coupon rate of 12% of the face value of the bond. However, as the coupon payments are made quarterly, the quarterly interest that will be paid by Desert will be,
Quarterly Interest Payment = 3158061 * 12% * 1/4
Quarterly Interest Payment = $94741.83
Coronado Industries is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6370000 on March 1, $5280000 on June 1, and $8650000 on December 31. Coronado Industries borrowed $3170000 on January 1 on a 5-year, 13% note to help finance construction of the building. In addition, the company had outstanding all year a 11%, 3-year, $6350000 note payable and an 12%, 4-year, $12350000 note payable. What are the weighted-average accumulated expenditures
Answer:
Coronado Industries
The weighted-average accumulated expenditures are:
= $8,388,333.
Explanation:
a) Data and Calculations:
Amount borrowed on June 1 = $3,170,000
Interest rate = 13%
Outstanding 11% 3-year note payable = $6,350,000
Outstanding 12% 4-year note payable = $12,350,000
Date Expenditure Weight Weighted-Average
Expenditure
March 1 $6,370,000 10/12 $5,308,333
June 1 $5,280,000 7/12 3,080,000
December 31 $8,650,000 0/12 0
Weighted-average accumulated expenditure $8,388,333
Coronado Industries received proceeds of $122200 on 10-year, 6% bonds issued on January 1, 2020. The bonds had a face value of $130000, pay interest annually on December 31, and have a call price of 101. Coronado uses the straight-line method of amortization. What is the amount of interest Coronado must pay the bondholders in 2020
Answer:
$7,800
Explanation:
Calculation to determine the amount of interest Coronado must pay the bondholders in 2020
Using this formula
Interest=Bonds issued percentage*Bonds face value
Let plug in the formula
Interest=6%*$130,000
Interest=$7,800
Therefore the amount of interest Coronado must pay the bondholders in 2020 is $7,800
August 1 M. Harris, the owner, invested $8,000 cash and $34,400 of photography equipment in the company. August 2 The company paid $3,300 cash for an insurance policy covering the next 24 months. August 5 The company purchased supplies for $1,520 cash. August 20 The company received $2,100 cash from taking photos for customers. August 31 The company paid $881 cash for August utilities. Analyze each transaction above by showing its effects on the accounting equation—specifically, identify the accounts and amounts (including + or −) for each transaction. Use the following partial chart of accounts: Cash; Supplies; Prepaid Insurance; Equipment; M. Harris, Capital; Services Revenue; and Utilities Expense.
Answer:
Date : August 1
Assets (Cash $8,000 and Equipment $34,400) = Increase $42,400
Liabilities = No Effect
Equity (Capital $42,400) = Increase $42,400
Date : August 2
Assets (Cash and Equipment) = $3,300 decrease -cash and $3,300 increase - equipment
Liabilities = No effect
Equity = No Effect
Date : August 5
Assets (Cash and Supplies) = $1,520 decrease -cash and $1,520 increase - equipment
Liabilities = No effect
Equity = No Effect
Date : August 20
Assets (Cash ) = Increase $2,100
Liabilities = No Effect
Equity (Services Revenue) = Increase $2,100
Date : August 31
Assets (Cash = Decrease $881
Liabilities = No Effect
Equity (Utilities Expense) = Decrease $881
Explanation:
The accounting equation is stated as : Assets = Equity + Liabilities
Each and every transaction first identify the Accounts affected, then determine which accounts fall within the Asset, Equity or Liabilities category and the effect thereof to the category.
Indicate what components of GDP (if any) each of the following transactions would affect.
Transaction Consumption Investment Government Net
Purchases Exports
a. Dell sells a desktop computer from its
inventory to the Johnson family.
b. Your parents buy a bottle of French wine.
c. Honda expands its factory in Ohio.
d. California hires workers to repave Highway 101.
e. The federal government sends your grandmother
a Social Security check.
f. You pay a hairdresser for a haircut.
g. Your parents buy a new house from a local builder.
h. Uncle Henry buys a new refrigerator from a domestic
manufacturer.
Answer:
a. Dell sells a desktop computer from its inventory to the Johnson family.
Component of GDP to be affected: Consumption
b. Your parents buy a bottle of French wine.
Component of GDP to be affected: Consumption
c. Honda expands its factory in Ohio.
Component of GDP to be affected: Investment
d. California hires workers to repave Highway 101.
Component of GDP to be affected: Government Purchases
e. The federal government sends your grandmother a Social Security check.
Component of GDP to be affected: No impact
f. You pay a hairdresser for a haircut.
Component of GDP to be affected:
g. Your parents buy a new house from a local builder.
Component of GDP to be affected: Consumption
h. Uncle Henry buys a new refrigerator from a domestic manufacturer.
Component of GDP to be affected: Consumption
Partial balance sheets and additional iformation are listed below for Sowell Company.
SOWELL COMPANY
Partial Balance Sheets
as of December 31
Assets 2011 2010
Cash $40,000 $20,000
Accounts Receivable 70,000 85,000
Inventory 40,000 35,000
Liabilities
Accounts Payable $54,000 $62,000
Additional Information:
Net income was $88,000.
Depreciation expense was $19,000.
REQUIRED: Prepare the operating activities section of the statement of cash flows for 2011 using the indirect method.
Answer and Explanation:
The preparation of the operating activities section is presented below
Cash Flows from operating activities
Net Income $88,000
Adjustment made for non cash items:
Depreciation Expense $19,000
Add: Decrease in Account Receivable $15000 ($70,000 - $85,000)
Less: Increase in Inventory $(5000) ($40,000 - $35,000)
Less: Decrease in accounts payable $(8000) ($54,000 - $62,000)
Net cash flows from operating activities $109,000
Marigold Corp. produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is 0.3 pounds and 0.1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $0.1 per pound, and receiving and handling costs are $0.07 per pound. The hourly wage rate is $8 per hour, but a raise which will average $0.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is 0.2 hours and 0.1 hours, respectively. The standard direct labor rate per hour is
Answer:
$11.90
Explanation:
Standard direct labor rate per hour = Hourly wage rate + Average raise on wage + Payroll taxes + Fringe benefits
Standard direct labor rate per hour = $8 + $0.3 + $1.2 + $2.4
Standard direct labor rate per hour = $11.90.
After graduating from UCF, you plan to purchase a small condominium for $100,000. You will be required by the bank to put a down payment of 10% of the purchase price. You plan to finance the loan for 30 years. Assume monthly payments and a nominal rate (monthly compounding) of 3%. What percentage of the first 25 payments goes toward paying principal
Answer:
Percentage of the first 25 payments goes toward paying principal is 41.95%.
Explanation:
Note: See the attached excel file for the amortization schedule for the first 25 months.
In the attached excel file, the monthly is calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)
Where;
PV = Present value or the balance to pay = Cost * (100% - Percentage of down payment) = $100,000 * (100% - 10%) = $90,000
P = Monthly payment = ?
r = Monthly interest rate = Nominal rate / 12 = 3% / 12 = 0.25%, or 0.0025
n = number of months to repay = 30 years * 12 months = 360
Substitute the values into equation (1) and solve for P, we have:
$90,000 = P * ((1 - (1 / (1 + 0.0025))^360) / 0.0025)
$90,000 = P * 237.189381504283
P = $90,000 / 237.189381504283
P = $379.44
From the attached excel file, we have:
Total payment for the first 25 months = $9,486.09
Total repayment of principal for the first 25 months = $3,979.17
Therefore, we have:
Percentage of the first 25 payments goes toward paying principal = (Total repayment of principal for the first 25 months / Total payment for the first 25 months) * 100 = ($3,979.17 / $9,486.09) * 100 = 41.95%
Behavioral finance is the study of:_________.
a. how investors react to accounting-based profit fluctuations.
b. how investors react to interest rates and foreign currency fluctuations.
c. how investors react to certain ways to diversify a portfolio.
d. how investors react to the amount of risk versus the amount of return in securities.
Answer:
D). how investors react to the amount of risk versus the amount of return in securities.
Explanation:
Behavioral finance can be regarded as study involving influence of psychology on investors behavior as well as financial analysts. encompass effects that comes after this on the markets. It explains that investors cannot always described as rational. It should be noted that the Behavioral finance is the study of how investors react to the amount of risk versus the amount of return in securities.
Absorption and Variable Costing Comparisons: Production Equals Sales Assume that Smuckers manufactures and sells 30,000 cases of peanut butter each quarter.
The following data are available for the third quarter of 2017.
Total fixed manufacturing overhead.......................................................90,000
Fixed selling and administrative expenses........... .. . .. . .. . . . . .. . . . . . 20,000
Sale price per case..................................................................................32
Direct materials per case .......................................................................15
Direct labor per case ........................................................................6
Variable manufacturing overhead per case ..........................................3
a. Compute the cost per case under both absorption costing and variable costing.
b. Reconcile any differences in income. Explain.
c. Compute te net income under both absorption costing and variable costing.
Answer:
a. Cost per case under Absorption costing:
= Direct materials per case + Direct labor per case + Variable manufacturing overhead per case + Fixed manufacturing overhead per case
= 15 + 6 + 3 + 90,000/ 30,000 cases
= $27
Cost per case under Variable costing:
= Direct materials per case + Direct labor per case + Variable manufacturing overhead per case
= 15 + 6 + 3
= $24
b. First we need to calculate income under both methods:
Under Absorption costing:
= Sales - Cost of goods sold - Selling and Admin expenses
= (30,000 cases * 32) - (30,000 * 27) - 20,000
= $130,000
Under Variable Costing:
= Sales - Cost of Goods sold - Fixed manufacturing overhead - Selling and Admin expenses
= (30,000 * 32) - (30,000 * 24) - 90,000 - 20,000
= $130,000
There is no difference in income because the cases manufactured equals the cases sold.
The financial statements for Highland Corporation included the following selected information:
Common stock $465,000
Retained earnings $830,000
Net income $1,120,000
Shares issued 93,000
Shares outstanding 65,000
Dividends declared and paid $720,000
The common stock was sold at a price of $33 per share.
Required:
a. What is the amount of additional paid-in capital?
b. What was the amount of retained earnings at the beginning of the year?
c. How many shares are in treasury stock?
Answer:
a. Additional paid-in capital:
= Amount received from shares issued - Common stock
= (33 per share * 93,000) - 465,000
= $2,604,000
b. Beginning retained earnings:
Ending retained earnings = Beginning retained earnings + Net income - Dividend
830,000 = Beginning retained earnings + 1,120,000 - 720,000
Beginning retained earnings = 830,000 - 1,120,000 + 720,000
= $430,000
c. Treasury stock:
= Shares issued - Shares outstanding
= 93,000 - 65,000
= 28,000 shares
Boenisch Corporation produces and sells a single product with the following characteristics: The company is currently selling 8,000 units per month. Fixed expenses are $406,000 per month. Management is considering using a new component that would increase the unit variable cost by $3. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change
Answer: Increase by $2,000
Explanation:
Current net operating income is:
= Contribution margin - Fixed costs
= (68 * 8,000) - 406,000
= $138,000
If component is added, Variable cost increases by $3 to $105. New contribution margin is:
= 170 - 105
= $65
Units sold increases by 400 to 8,400.
Net operating income becomes:
= (65 * 8,400) - 406,000
= $140,000
Net operating income increased by:
= 140,000 - 138,000
= $2,000
Employing a lawyer to draft and enforce a private contract between parties wishing to solve an externality problem is an example of:_______.
a. an implicit cost.
b. a transaction cost.
c. a sunk cost.
d. an opportunity cost.
Answer:
b. a transaction cost.
Explanation:
Transaction costs can be regarded as expenses which is been incurred during the buying or selling of a good/ service.Transaction costs gives representation of the labor which is required in bringing a particular good/ service to the market,. They are cost required to make any economic trade in regards to participation in a market.
example of transaction cost is
Employing a lawyer to draft and enforce a private contract between parties wishing to solve an externality problem.