Calculating product cost


Question:

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?

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Accounting Basics: Calculating product cost
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