The Compagnie Naturelie sells mounted butterflies,using butterfly bait it buys from another firm for $20 thousand.It pays its workers $35 thousand,pays $1 thousand in taxes,and has profits of $3 thousand.What is its value added?
A)$3 thousand
B)$19 thousand
C)$39 thousand
D)$59 thousand

Question

Quizplus · Accepted Answer

Value added is calculated by subtracting the cost of materials and services used in production from the total revenue. In this case, the total revenue is the sum of the cost of butterfly bait ($20,000), the wage paid to workers ($35,000), taxes paid ($1,000), and profits ($3,000), which gives a total revenue of $59,000. The cost of materials and services used is the cost of butterfly bait, which is $20,000. Therefore, the value added is $59,000 - $20,000 = $39,000.

The Compagnie Naturelie Sells Mounted Butterflies,using Butterfly Bait It Buys