BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Explicit costs are normal business costs that appear in a company’s general ledger and directly affect its profitability. They have clearly defined dollar amounts that flow through to the income statement. Examples of explicit costs include wages, lease payments, utilities, raw materials, and other direct costs.

Detailed explanation-2: -Implicit costs are also referred to as imputed, implied, or notional costs. These costs aren’t easy to quantify. That’s because businesses don’t necessarily record implicit costs for accounting purposes as money does not change hands. These costs represent a loss of potential income, but not of profits.

Detailed explanation-3: -Implicit costs are unrecorded, but they are still considered indirect costs. Calculating the difference between these two types of costs requires comparison analysis. Explicit costs are reported separately and are paid in cash to third parties. Examples of these costs are rent and utilities, and compensation.