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BUS640 Discussion's Week 1 - When Burton Cummings graduated...

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BUS640 Discussion's Week 1

BUS640 Discussion's Week 1 - When Burton Cummings graduated...

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When Burton Cummings graduated with honors from the Canadian Trucking Academy, his father gave him a $350,000 tractor-trailer rig. Recently, Burton was boasting to some fellow truckers that his revenues were typically $25,000 per month, while his operating costs (fuel, maintenance, and depreciation) amounted to only $18,000 per month. Tractor- trailer rigs identical to Burton’s rig rented for $15,000 per month. If Burton was driving trucks for one of the competing trucking firms, he would earn $5,000 per month. If Burton was driving trucks for one of the competing trucking firms, he would earn a net cash flow of $7,000 ($25,000-$18,000) per month, since he would be earning only $5,000 per month if he were working for a trucking firm. C ompute both Burton Cumming’s explicit costs per month and his implicit cost per month. Explicit costs are monetary out-of-pocket payments for market supplied resources (Thomas & Maurice, 2011). Burton’s explicit costs are his operating costs which were $18,000. Implicit costs are nonmonetary opportunity cost of using owner supplied resources (Thomas & Maurice, 2011). Burton’s implicit costs are $15,000 because it was
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