Jim’s Consulting is owned by James Smith. For the past year, Jim’s Consulting had the following revenues and costs → Revenues $600,000 Supplies $20,000 Electricity and water $10,000 Employees’ salaries $300,000 Jim’s salary $250,000 James has the option of shutting down and renting the building he owns for $60,000 per year. Additionally, James could work for a larger consulting house for $275,000 per year. Answer the following: What is Jim’s Consulting’s accounting cost? What is Jim’s Consulting’s economic cost? What is Jim’s Consulting’s economic profit?
Jim’s Consulting is owned by James Smith. For the past year, Jim’s Consulting had the following revenues and costs → Revenues $600,000 Supplies $20,000 Electricity and water $10,000 Employees’ salaries $300,000 Jim’s salary $250,000 James has the option of shutting down and renting the building he owns for $60,000 per year. Additionally, James could work for a larger consulting house for $275,000 per year. Answer the following: What is Jim’s Consulting’s accounting cost? What is Jim’s Consulting’s economic cost? What is Jim’s Consulting’s economic profit?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter3: Benefits, Costs, And Decisions
Section: Chapter Questions
Problem 3.5IP
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Jim’s Consulting is owned by James Smith. For the past year, Jim’s Consulting had the following revenues and costs →
|
Revenues |
$600,000 |
|
Supplies |
$20,000 |
|
Electricity and water |
$10,000 |
|
Employees’ salaries |
$300,000 |
|
Jim’s salary |
$250,000 |
James has the option of shutting down and renting the building he owns for $60,000 per year. Additionally, James could work for a larger consulting house for $275,000 per year.
Answer the following:
- What is Jim’s Consulting’s accounting cost?
- What is Jim’s Consulting’s economic cost?
- What is Jim’s Consulting’s economic profit?
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Based on these answers, should James continue operating the company?
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