1. Maria is the owner and operator of a small local bakery that has annual sales revenue of $200,000. The annual salary expense paid to Maria's employees is $50,000. The cost of supplies used during the year totals $50,000. The amount paid for the annual rent for the building and utilities is $30,000. Maria used $100,000 of her personal savings to purchase equipment for the shop. Maria could have earned a 10% interest rate on this $100,000 if it had been left in the bank. Maria has rerently been offered a job to work full-time as a pastry chef for l $65,000 at a restaurant in town-. 1. Calculate the accounting profit for this business. 2. Calculate the economic profit for this business. 3. Explain whether Maria should continue to own and operate the bakery or whether she should accept the job at the restaurant.
1. Maria is the owner and operator of a small local bakery that has annual sales revenue of $200,000. The annual salary expense paid to Maria's employees is $50,000. The cost of supplies used during the year totals $50,000. The amount paid for the annual rent for the building and utilities is $30,000. Maria used $100,000 of her personal savings to purchase equipment for the shop. Maria could have earned a 10% interest rate on this $100,000 if it had been left in the bank. Maria has rerently been offered a job to work full-time as a pastry chef for l $65,000 at a restaurant in town-. 1. Calculate the accounting profit for this business. 2. Calculate the economic profit for this business. 3. Explain whether Maria should continue to own and operate the bakery or whether she should accept the job at the restaurant.
Chapter6: Business Expenses
Section: Chapter Questions
Problem 68P
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT