Question

Find out explicit cost from the following

Particulars Rs in thousands

i. investment in fixed assets 2000

ii. borrowings at 12% interest per annum 1500
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iii. wages paid during the year 120

iv. annual rental value of the owner’s factory building 100

v. annual depreciation 100

vi. estimated annual value of the management service of the

owner 240​

Answer 1

Answer:

kon si class ka he

Answer 2

Explicit costs are the expenses of a firm that are simple to take a note of.

• Explicit costs will be calculated as -

1. Interest on borrowings - 12% pa of 1500

= 12/100 x 1500

= 180

Thus, out of the given elements, -

Explicit cost = Interest on borrowings+ Wages paid+ Depreciation

= 180 + 120 + 100

= 400

Thus, the explicit costs are Rs. 400