Suppose a firm has an annual budget of $150,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. the owner-manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. the firm earns revenues of $320,000 per year. what are the annual accounting costs for the firm described above?

The annual explicit costs for the firm is $310,000.

Explanation:

Explicit cost refers to the cost of the resources purchased by firm from outsiders.

Calculate the annual explicit cost -

Annual explicit cost = Wages and salaries + Materials + New equipment + rented property + interest cost on capital

Annual explicit cost = $150,000 + $75,000 + $30,000 + $20,000 + $35,000

Annual explicit cost = $310,000

Thus,

The annual explicit costs for the firm is $310,000.

answer; commerce clearing house;