I agree that the tractor is a fixed cost. However, what I am trying to say is that the tractor does not cost us $10,000 to use it this year. The 10,000 is not "gone", it has been converted into an asset that will provide us service for many years.
The cost of my business this year should be thought of as: "How much do I have to GIVE UP this year in order to be in this business?" Because we paid $10,000 but can get 9,000 back after this year, we truly only give up 1,000 for the tractor.
really good video. But, I have not understand why you have not taken the price of the tractor in your explicit cost. The price of the tractor is a fixed cost and it is a direct expense.
Wonderful video. Exceptional explaination. Thank you.
albedran2 3 months ago
Isla-
I agree that the tractor is a fixed cost. However, what I am trying to say is that the tractor does not cost us $10,000 to use it this year. The 10,000 is not "gone", it has been converted into an asset that will provide us service for many years.
The cost of my business this year should be thought of as: "How much do I have to GIVE UP this year in order to be in this business?" Because we paid $10,000 but can get 9,000 back after this year, we truly only give up 1,000 for the tractor.
BurkeyAcademy 1 year ago
really good video. But, I have not understand why you have not taken the price of the tractor in your explicit cost. The price of the tractor is a fixed cost and it is a direct expense.
isla2974 1 year ago