Use the Following Data for an Ice-Cream Vendor at a Local

question 121

Essay

Use the following data for an ice-cream vendor at a local fair: $$\begin{array} { | l | r | } \hline \text { Reverue: } & \$ 1,800 \\\hline \text { Costs: } & \\\hline \text { Wages and salaries } & \$ 350 \\\hline \text { Concession stand fee } & \$ 300 \\\hline \text { Rental fee for truck } & \$ 100 \\\hline \text { Ice cream } & \$ 850 \\\hline\end{array}$$ (A) Calculate the vencar's value anded.
(B) Profits are revenue minus costs. Cepital income cansists of prafits, rents, and interest. Show that the value added equuls capital income plus labor income paid by the vendar.
(C) Suppose that at a similar fair, the temperature is codler and revenues fall to 1,500 , but the prices of intermepliate inputs, rental fees, and wages and saleries ta not change. What happens to value added and profits in this case?

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Definitions:

Ending Inventory

The financial valuation of items for sale at the conclusion of a financial period, figured by starting with the beginning inventory, adding purchases, and then deducting the cost of goods sold.

Purchased

Refers to goods or services obtained by paying money or its equivalent.

Master Budget

A comprehensive financial planning document that includes all of an organization's budgets, combining sales, production, and financial budgets to project overall financial activities.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, often used by companies to manage liquidity and ensure sufficient cash on hand.