​Sebastian Decides to Open a Tree Farm

question 386

Multiple Choice

​Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his first year. What are Sebastian's implicit costs from running his own business?

• A)​$30,600
• B)​$55,600
• C)​$50,000
• D)​$75,600

---

Definitions:

Materials Requisition Slip

A document used to request and authorize the removal of materials from inventory for production or other internal use.

Direct Materials

Raw materials directly used in the production of goods, easily traceable to the finished product.

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product, such as lubricants for machinery.

Time Tickets

Documentation used to track the amount of time an employee spends on various tasks, often used in industries where billing is based on hours worked.