Compute both burton cummings explicit costs every month

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Reference no: EM1320314

Q. 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 every month, while his operating costs (fuel, maintenance also depreciation) amounted to only $18,000 every month. Tractor-trailer rigs identical to Burton's rig rent for $15,000 every month. If Burton was driving trucks for one of the competing trucking industries, he would earn $5,000 every month. Burton is proud of the fact that he is generating a net cash flow of $7,000 ($25,000 - $18,000) every month, since he would be earning only $5,000 every month if he were working for a trucking industry.

Compute both Burton Cummings's explicit costs every month also his implicit costs every month. Compute the opportunity cost of the resources utilized by Burton Cummings each month. Illustrate what advice would you give Burton Cummings? Explain your advice in terms of opportunity costs.

Reference no: EM1320314

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