What Are Explicit Cost And Implicit Cost?
Explicit cost An Explicit cost is a business expense accounted cost that can be easily identified such as wage, rent and materials. Explicit costs gives clear and evident cash outflows from business that decreases its end result profitability. This cost directly effect the revenue. Intangible expenses such as goodwill and amortization are not explicit expense because these expenses don’t show clear effects on a business’s revenue and expenses. Implicit cost An implicit cost results if the person who at first foregoes the satisfaction in the search of an activity and is not rewarded by money or another form of payment. The implicit cost begins and ends with foregoing the benefits and satisfaction. When an organization or owner uses its own equity for company’s well-air then that cost is considered as implicit cost. Goodwill is a good example of implicit cost. Explicit Cost vs. Implicit Cost Explicit cost can be counted in terms of money whereas implicit cost can not be traded and theref
