An annual income statement from Quest Realty, Inc. is shown below:.
Revenues
Revenue from sales of goods and services.$80,000,000.
Operating costs and expenses:
Cost of products and services sold.$30,000,000
Selling expenses.$3,000,000
Administrative expense.$4,000,000
Total operating costs and expenses.$37,000,000
Income from operations.$43,000,000
Interest expense (corporate bonds & loans).$300,000
Non-recurring expense (Legal expenses/fines in
settling a federal antitrust suit.$200,000.
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.
d 11.Total explicit costs of using market-supplied resources for Quest Realty for this year are
A.$23,000,000
B.$37,000,000
C.$38,200,000
D.$41,000,000
E.none of the above
a 12.Total implicit costs of using owner-supplied resources for Quest Realty for this year are
A.$4,100,000
B.$19,000,000
C.$38,200,000
D.$41,000,000
E.none of the above
d 13.Total economic cost is
A.$17,000,000
B.$38,200,000
C.$41,000,000
D.$42,300,000
b 14.Quest’s accounting profit is
A.$4,100,000
B.$9,360,000
C.$38,200,000
D.$42,300,000
E.none of the above
c 15.Economic profit is
A.$19,000,000
B.$21,800,000
C.$38,200,000
D.$41,000,000
E.none of the above
