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    Calculating the accounting and economic costs

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    Suppose a company incurs the following costs: Labor - $400, Equipment - $300, Material - $100. However, it owns the building so dosen't have to pay the $800 in rent.

    - What is the tolal accounting cost?
    - What is the total economic cost?
    - Explain why these are different in this way.

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    https://brainmass.com/economics/labour-economics/calculating-accounting-economic-costs-499494

    Solution Preview

    Let us calculate explicit costs first

    Explicit costs are costs for which actual payments are made.
    Labor Cost = $400
    Equipment = $300
    Material = $100
    Total explicit costs = Labor Cost + Equipment ...

    Solution Summary

    Solution describes the steps to calculate the total accounting and economic costs in the given case.

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