Q 1. An annual income statement from Quest Realty, Inc. is shown below: (A) Revenues Revenue from sales of goods and services. Operating costs and expenses: Cost of products and services sold Selling expenses... Administrative expense. S80,000,000 S30,000,000 S3,000,000 $4.000.000 Total operating costs and expenses. S37.000,000 Income from operations. Interest expense (corporate bonds & loans). Non-recurring expense (Legal expenses fines in settling a federal antitrust suit S43,000,000 S300,000 S200,000 Income taxes. $700.000 Net income. $41,800,000 During this year of operation, Quest Realty owned and occupied an office building in downtown Indianapolis. For this year, the building could have been leased to other businesses for $2,000,000 in lease income. Quest Realty also owned undeveloped land valued at $15,000,000. Owners of Quest Realty can earn a 14% rate of return annually on funds invested elsewhere. Calculate: a) Total explicit costs b) Total implicit costs c) Total economic cost d) Quest's accounting profit e) Economic profit Q1. (В) A firm's demand function is Q = 16 - P and its total cost function is defined as TC = 3+ Q+ 0.25Q? Use these two functions to form the firm's profit function and then determine the level of output that yields the profit maximum. What is the level of profit at the optimum?
Q 1. An annual income statement from Quest Realty, Inc. is shown below: (A) Revenues Revenue from sales of goods and services. Operating costs and expenses: Cost of products and services sold Selling expenses... Administrative expense. S80,000,000 S30,000,000 S3,000,000 $4.000.000 Total operating costs and expenses. S37.000,000 Income from operations. Interest expense (corporate bonds & loans). Non-recurring expense (Legal expenses fines in settling a federal antitrust suit S43,000,000 S300,000 S200,000 Income taxes. $700.000 Net income. $41,800,000 During this year of operation, Quest Realty owned and occupied an office building in downtown Indianapolis. For this year, the building could have been leased to other businesses for $2,000,000 in lease income. Quest Realty also owned undeveloped land valued at $15,000,000. Owners of Quest Realty can earn a 14% rate of return annually on funds invested elsewhere. Calculate: a) Total explicit costs b) Total implicit costs c) Total economic cost d) Quest's accounting profit e) Economic profit Q1. (В) A firm's demand function is Q = 16 - P and its total cost function is defined as TC = 3+ Q+ 0.25Q? Use these two functions to form the firm's profit function and then determine the level of output that yields the profit maximum. What is the level of profit at the optimum?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Q1.
An annual income statement from Quest Realty, Inc. is shown below:
(A)
Revenues
Revenue from sales of goods and services
S80,000,000
Operating costs and expenses:
Cost of products and services sold
Selling expenses...
Administrative expense.
S30,000,000
S3,000,000
$4,000,000
Total operating costs and expenses.
S37.000.000
Income from operations
Interest expense (corporate bonds & loans).
Non-recurring expense (Legal expenses fines in
settling a federal antitrust suit.
Income taxes
S43,000,000
S300,000
S200,000
$700.000
Net income..
S41,800,000
During this year of operation, Quest Realty owned and occupied an office building in
downtown Indianapolis. For this year, the building could have been leased to other
businesses for $2,000,000 in lease income. Quest Realty also owned undeveloped land
valued at $15,000,000. Owners of Quest Realty can earn a 14% rate of return annually
on funds invested elsewhere.
Calculate:
a) Total explicit costs
b) Total implicit costs
c) Total economic cost
d) Quest's accounting profit
e) Economic profit
Q 1.
(В)
A firm's demand function is Q= 16 - P and its total cost function is defined as TC = 3 +Q+
0.25Q? Use these two functions to form the firm's profit function and then determine the level
of output that yields the profit maximum. What is the level of profit at the optimum?
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