Suppose a Firm Has an Annual Budget of $200,000 in Wages

question 46

Multiple Choice

Suppose a firm has an annual budget of $200,000 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 $360,000 per year. To receive a normal profit,the firm described above would have to

• A)Experience $10,000 less in cost.
• B)Receive $90,000 more in revenue.
• C)Receive $10,000 more in revenue.

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Definitions:

Meals

Food that is prepared and served to individuals or groups, often at set times of day.

Patient-Visits

A measure used in healthcare management to count the number of times patients receive clinical services.

Static Budget

A budget set for a specific level of activity that does not change, even if actual levels of activity change.

Total Overhead Cost

The comprehensive sum of all indirect costs involved in operating a business, not directly tied to a specific product or service.