Question
Hello, can I get help to answer the following scenario. NOTE: I WILL NOT USE YOUR WORK AS MINE. I WILL USE IT TO GUIDE
Hello, can I get help to answer the following scenario.
"NOTE: I WILL NOT USE YOUR WORK AS MINE. I WILL USE IT TO GUIDE MY STUDIES."
Suppose that you decide to start a landscape business. You use an old pickup truck that you've fully paid for. You store the truck and other equipment in your parents' barn, and you store trees and shrubs on their land. Your parents will not charge you for the use of these facilities for the first two years, but beginning in the third year they will charge a reasonable rent. Your mother helps you by answering phone calls and providing customers with information. She doesn't charge you for this service, but she plans on doing it for only your first two years in business. In pricing your services, should you include charges for the truck, the barn, the land, and your mother's services when calculating your product cost? The basic arguments for and against are as follows.
- YES: If you don't include charges for these costs, your costs are understated and your profitability is overstated.
- NO: At this point, you are not actually incurring costs related to these activities; therefore, you shouldn't record charges.
Write a response indicating your position regarding this situation. Provide support for your view.
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