Suppose Lando Calrissian Owns a Smuggling Business Whose Total Revenue

question 146

Multiple Choice

Suppose Lando Calrissian owns a smuggling business whose total revenue is $30,000 per month. The accompanying table shows Lando's monthly expenses. If Lando weren't a smuggler, he would earn $6,000 per month working for the Rebel Alliance. Apart from pay, Lando is indifferent between working as a smuggler and working for the Rebel Alliance. $$\begin{array} { | l | r | } \hline \text { Fuel } & \$ 4,000 \\\hline \text { Mairterarce } & \$ 12,000 \\\hline \text { Weapors } & \$ 6,000 \\\hline \text { Bribes } & \$ 3,000\end{array}$$  
In the long run, we would expect Lando to:

• A)join the Rebel Alliance since his accounting profit from smuggling is negative.
• B)continue smuggling since his accounting profit from smuggling is positive.
• C)continue smuggling since his economic profit from smuggling is positive.
• D)join the Rebel Alliance since his economic profit from smuggling is negative.

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Definitions:

Time-Driven Activity-Based Costing

Time-driven activity-based costing is an approach to costing that assigns resource costs directly to products or services based on the actual time spent on activities, improving accuracy and simplifying the costing process.

Customer Service Department

A division of a business dedicated to addressing customer inquiries, complaints, and providing assistance.

Customer Cost Analysis

The process of evaluating all costs involved in acquiring and maintaining customers, often used to assess the profitability of customer relationships.

Time-Driven Activity-Based Costing

A costing method that assigns costs to products or services based on the time resources are utilized and the cost of those resources.