[1st_itemBCD] *problem situation in the photo below*Required:In Problem 1, what is Merrilyn’s accounting costs---type and magnitude?In Problem 1, what is Merrilyn’s economic costs---type and magnitude?In Problem 1, how much would Merrilyn need in revenue to earn positive accounting profits? Positive economic profits? Merrilyn Forney is considering starting a deliveryservice company. She presently makes PHP 800,000 ayear as a junior advertising executive and will give upthis job if she opens the delivery service company. Sheplans to start with two motorcycles; hence, if shechooses to establish and operate the delivery servicecompany, her annual cost will be: PHP 400,000 forcompensation of drivers;PHP 20,000 for motorcyclemaintenance; PHP 5,000 for insurance; PHP 24,000 forfuel; and PHP 6,000 for oil.

Accounting Profit = Total Revenue - Total Explicit Cost Economic Profit = Total Revenue - Total…

Answered: [1st_itemBCD] *problem situation in the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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[1st_itemBCD] *problem situation in the photo below*

Required:

In Problem 1, what is Merrilyn’s accounting costs---type and magnitude?
In Problem 1, what is Merrilyn’s economic costs---type and magnitude?
In Problem 1, how much would Merrilyn need in revenue to earn positive accounting profits? Positive economic profits?

Merrilyn Forney is considering starting a delivery
service company. She presently makes PHP 800,000 a
year as a junior advertising executive and will give up
this job if she opens the delivery service company. She
plans to start with two motorcycles; hence, if she
chooses to establish and operate the delivery service
company, her annual cost will be: PHP 400,000 for
compensation of drivers;PHP 20,000 for motorcycle
maintenance; PHP 5,000 for insurance; PHP 24,000 for
fuel; and PHP 6,000 for oil.

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