Sebastian Decides to Open a Tree Farm

question 67

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. Which of the following statements is correct? ​

• A)​Sebastian's total explicit costs are $15,400.
• B)​Sebastian's total implicit costs are $55,600.
• C)​Sebastian's accounting profit is $35,000.
• D)​Sebastian's economic profit is $4,600.

Recognize and categorize the manufacturing costs including direct materials, direct labor, and factory overhead.

Comprehend the primary goal of managerial accounting and its audience.

Understand the classification of costs as product, period, and conversion costs.

Identify and explain the processes involved in planning and controlling within an organization.

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Definitions:

Freudian Therapist

A psychotherapist who employs the techniques and theories of Freud, focusing on unconscious processes and psychosexual development.

Defence Mechanisms

According to Sigmund Freud, mechanisms through which the ego allows the expression of libidinal desires in a distorted or symbolic form.

Repression

A psychological defense mechanism where unsettling thoughts, memories, or desires are unconsciously pushed from the conscious mind.

Fundamental

Fundamental refers to serving as an essential component or basis for something, being of central importance.