Frank Owns a Dog-Grooming Business

question 130

Multiple Choice

Frank owns a dog-grooming business. Which of the following costs would be implicit costs? (i) dog shampoo
(ii) rent on the storefront
(iii) wages Frank could earn as a substitute elementary-school teacher
(iv) interest that Frank's money was earning before he spent his savings to set up the dog­
Grooming business

• A) (i) and (ii) only
• B) (iv) only
• C) (iii) and (iv) only
• D) (i), (ii), (iii), and (iv)

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Definitions:

Period Costs

Expenses that are not tied directly to the production process and are expensed in the period they are incurred, such as selling, general, and administrative expenses.