Suppose a Firm Has an Annual Budget of $200,000 in Wages

question 61

Multiple Choice

Suppose a firm has an annual budget of $200,000 in wages and salaries,$75,000 in materials,$30,000 in new equipment,$20,000 in rented property,and $35,000 in interest costs on capital.The owner/manager does not choose to pay himself,but he could receive income of $90,000 by working elsewhere.The firm earns revenues of $360,000 per year.What are the annual explicit costs for the firm described above?

• A)$450,000.
• B)$160,000.
• C)$90,000.
• D)$360,000.

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Definitions:

Salary

A financial reward calculated on a weekly, monthly, or annual basis.

White-collar Workers

Employees who perform professional, managerial, or administrative work, typically in an office setting.