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Lemondae Stand

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Submitted By paankadu
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Lemonade Stand
According to the text book economics is “the study of how best to allocate scarce resources among competing uses” (Larson et al, 2007. p. 340). The United States continued search for stronger prosperity continues to grow. Each business wants to grow stronger and to do so they need to continue to produce more goods and service. By utilizing their various financial statements they will be able to develop an Economic Profit report which will show them how they are failing or growing.
The Economic Profit Report takes information from a variety of sources in the business’ paperwork to give the owner an idea of where they stand. This report is made up of explicit revenue and expenses and implicit revenue and expenses. The explicit expenses are clear cut costs that a business pays to outsiders that reduce the bottom line profit of a company. Implicit expenses are those costs that are within the business such as hours worked. Both sets of expenses are added together and both sets of revenues are added together to give the totals for each section. Expenses are then subtracted from revenues to give the business their Economic Profit.
To determine the implicit expenses of the lemonade stand for the three seasons was a matter of figuring the amount of hours that were spent working each of the 6 days for each of the seasons. This total number of hours was then multiplied by a wage for each of the seasons. This expense is necessary for any business to run as the owner will need to pay the employees some sort of a wage to work. Without this expense the business will be closed and not making any money. When increasing the wages the business owner will need to make sure the business can sustain such an increase without jeopardizing the bottom dollar.
Table 1 – Breakdown of hours/wages for implicit expenses for economic report
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