Question

Suppose a company incurs the following costs:
Labor $700
Equipment $800
Materials $500
It owns the building, so it doesn’t have to pay the usual $1750 in rent.
a. Total accounting cost is equal to
b. Total economic cost is equal to
c. What is the new accounting and economic costs if the company sold the building and then leased it back?
Toal accounting costs is now equal to
Total economic cost is equal to

Answer 1

Answer:

Suppose a company incurs the following costs: labor, $600; equipment, $300; and materials, $200. The company owns the building, so it doesn�t have to pay the usual $900 in rent.

Instructions: Enter your responses as a whole number.

(a) What is the total accounting cost?

$

(b) What is the total economic cost?

$

(c) If the company sold the building and then leased it back, what would be the new

(i) Accounting costs?

$

(ii) Economic costs?

$

Expert Answer