Use the Following to Answer Questions

question 77

Multiple Choice

Use the following to answer questions:
Scenario: Accounting and Economic Profit
Rather than put the $100,000 that his grandmother left him in a mutual fund that earns 5% each year, Tommy Wang quit his job, which paid $60,000 per year, and started Wang's Wicker Furniture Store. He rented a showroom for $20,000 for the year, purchased $60,000 in wicker furniture, and incurred costs of $40,000 for sales help and advertising. Instead of using the capital for his own business, he could rent it to a rival firm and earn $5,000 a year. In his first year, his revenue was $150,000.
-(Scenario: Accounting and Economic Profit) Look at the scenario Accounting and Economic Profit. What is the implicit cost of Wang's Wicker Furniture Store?

• A) $7,000
• B) $60,000
• C) $65,000
• D) $69,000

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Definitions:

Strategic Management

The process of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives and gain a competitive advantage.

Big Picture

An overall or comprehensive view or perspective of an issue or situation, considering all relevant factors and potential implications.

Strategy

A comprehensive plan created to achieve long-term goals within an organization, involving the allocation of resources to capitalize on opportunities or manage threats.

Top Level Management

The highest tier of executives and managers in a company, responsible for controlling and overseeing the entire organization.