Tom borrowed $40,000 from his parents to open a donut stand. He agrees to pay his parentsa 5% yearly return on the money they lent him. His other yearly fixed costs equal $10,000.His variable costs equal $25,000. He sold 40,000 dozen donuts during the year at a price of$2.00 per dozen.Tom's total costs equal:O $37,000O $59,000O $40,000O $25,000

Amount of interest = Amount borrowed x Rate of return = $40,000 x 5% = $2,000

Answered: Tom's total costs equal:

Business

Accounting

Tom's total costs equal:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

Tom borrowed $40,000 from his parents to open a donut stand. He agrees to pay his parents
a 5% yearly return on the money they lent him. His other yearly fixed costs equal $10,000.
His variable costs equal $25,000. He sold 40,000 dozen donuts during the year at a price of
$2.00 per dozen.
Tom's total costs equal:
O $37,000
O $59,000
O $40,000
O $25,000

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