Tim Has Decided to Run a Lawn Service Business for the Summer.He

question 44

Essay

Tim has decided to run a lawn service business for the summer.He charges customers $100 per month to mow and maintain their lawns.In May he was able to get 10 contracts signed, for services starting
June 1st.On June 1st he collected $100 from each of seven customers and $300 from the other three, who will all be out of town for the summer so have paid for all three months at once.Tim bought a second-hand mower for the summer for $240, which he picked up in May but didn't pay for until June, when he had some cash
available.He estimates that it will be completely worn out by the end of the summer.He mowed and maintained the lawns for June and paid $50 for gas for his mower.
Required:
A) What is Tim's net income for June under the cash basis of accounting?
B) What is Tim's net income for June under the accrual basis of accounting?
C) What is Tim's expected net income for the summer under the cash basis of accounting?
D) What is Tim's expected net income for the summer under the accrual basis of accounting?
E) Which method is more appropriate for Tim? Support your answer.

• A) What is Tim's net income for June under the cash basis of accounting?
• B) What is Tim's net income for June under the accrual basis of accounting?
• C) What is Tim's expected net income for the summer under the cash basis of accounting?
• D) What is Tim's expected net income for the summer under the accrual basis of accounting?
• E) Which method is more appropriate for Tim? Support your answer.

Apply the concept of diminishing marginal returns to analyze its impact on cost curves and decision-making in production.

Comprehend the role of fixed costs in the short-run and how they impact average costs.

Recognize the implications of producing at different output levels on profits, especially in a perfectly competitive market scenario.

Examine the effects of changes in production levels on marginal and average costs, and their subsequent influence on pricing and output decisions.

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Definitions:

Radical Behaviorists

Scholars who adhere to a strict form of behaviorism, emphasizing observable behaviors over internal phenomena like thoughts or emotions.

Observable Behaviors

Actions or reactions of individuals or systems that can be directly seen or measured.

Pragmatists

Thinkers or philosophers who judge the truth of theories or beliefs in terms of the success of their practical application.

Subconscious

The part of the mind that is not fully aware but influences actions and feelings.