Mike's Fish Market Is Implementing a Project That Will Initially

question 33

Multiple Choice

Mike's Fish Market is implementing a project that will initially increase accounts payable by $4,600,increase inventory by $4,800,and decrease accounts receivable by $800.All net working capital will be recouped when the project terminates.What is the cash flow related to the net working capital for the last year of the project?

• A)-$2,000
• B)-$400
• C)-$600
• D)$200
• E)$2,000

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Definitions:

Explicit Costs

Direct, out-of-pocket payments for inputs or resources used in the production of goods or services, such as wages for labor, rent for offices, or materials for production.

Implicit Costs

Implicit costs are the opportunity costs of using resources that a company already owns, representing the potential income lost by not utilizing them elsewhere.

Diseconomies of Scale

A phenomenon where an increase in production leads to higher average costs per unit due to inefficiencies, often occurring when companies become too large.

Average Total Cost

The total cost per unit of output, calculated by dividing the total cost of production by the number of units produced.