Falquez Company Sells Three Products: R, S, and T

question 152

Multiple Choice

Falquez Company sells three products: R, S, and T. Data for activity of Falquez Company during July are as follows: Common fixed expenses for July amounted to $90,000.
-Net operating income for the company was:

• A)$166,000
• B)$256,000
• C)$334,000
• D)$46,000

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Definitions:

Implicit Costs

Indirect expenses related to business operations, such as opportunity costs, not directly paid out in cash.

Economic Profits

The excess of total revenue over total costs, including both implicit and explicit costs.

Implicit Costs

Costs that represent the opportunity cost of using resources that are not directly paid for, such as the owner’s time or the use of assets owned by the firm.

Explicit Costs

Direct, out-of-pocket payments for resources or services used in the production process.