Question

1. The following is the cost of Mr. Rogers farm in Illinois. Total Revenue: $280,000 in the year 2018.

Cost	$ Amount	Fixed Cost	Variable Cost	Explicit Cost	Implicit Cost
Materials	$45,000
Labor	$160,000
VOT	$75,000
Rental Equipment	$3,500
Insurance	$2000
License Fees	$2000
Counselling Service	$12,000
Advertising fee	$500
Total Cost

*** VOT = Value of owner's time

Do complete analyzes of his business and Find the results of accounting and economic profits of the farm. Make sure to fill out the table. Explain your findings and provide

any recommendation you may have to Mr. Rogers?

Answer 1

ANSWER! Given that, The following is the cost er Mr. Roger's farm in illinois Total Revenue; $280,000 in the year 2018, $ fined cost variable Explicit Implicit cost cost cost cost Amount Materials $ 45,000 45000 $160,000 Labor 160,000 75000 $75,000 VOT Rental equipment 3,500 $ 3,500 $2,000 2000 Insurance 2000 $ 2,000 $12,000 12.000 Service License Fees counselling Advertising Fee Total cost soo $ 500 3500 16 500 2,05,000 $ 300,000 75,000 Now, Fined cost Fixed cost does not vary with the level of output. it will include rental equipment 3500 variable cost output variable cost that vary with level of 4 5000+ 160,000 = 2,05,000

Explicit cost Explicit cost is the total payment that is made outside The business 2000 + 2000+12,000+500 = 16 500 goods Implicit cost Implicit is the im puted value of owners services 75,000 Here, Accounting profit - Total revenue - - Total revenue-(fixed fost+ variable cost + explicit cost ) Accounting costs 280,000 - (3500 +2.05,000 + 16,500) 280,000 -2,25,000 5 5000 Therefore, Accounting profit . 53000 Economic profit - Total Revenue - economic costs Total Revenue - (fixed cost + variable cost + El plicit cost + implicit cost ) s 280,000 (3500+20 5000 +1650007 75000) 55000 - 75000 20,000

Therefore, Economic profit -- 20,000