James was a high school teacher earning a net salaryof $4500 per month. After working for one year, he quithis job to start his own kiosk business dealing invarious consumer goods. In order to learn how to runthe business, James enrolled in a TAFE to acquireaccounting skills. James' course was for 6 months.James had to pay $3,000 as tuition for the 3 months.After the training, James borrowed $40,000.00 from hisuncle whom he pays 8 percent interest per year.Also, James withdrew $ 50,000 from his savingsaccount. He had been earning 5 percent interest peryear for this account. Further, to start the businessJames used his own premises given to him by hisfather.His father had been receiving $11,000 from rent peryear. Finally, to start the business James uses $75,000he had been given by his father to go on holiday toUSA.James's first year of business can be summarised asfollows:ItemAmount $Revenue- Orange sectionRevenue- Beverages Section2 Cashiers expense (wages perworker)Mid-year revenue250,000180,000(40,000)100,000Truck expenseManager expenseMilk sales assistant expenseEquipment expenseMotorcycle(80,000)(60,000)(30,000)(50,000)(30,000)expensetoeasemovement in cityBased on your calculations of accounting profit andeconomic profit, would you advise James to return tohis teaching job or keep his kiost job? Show yourwork!

Based on the information given in the question, the profit has to calculated first. Accouting profit…

Answered: Based on your calculations of…

Based on your calculations of accounting profit and economic profit, would you advise James to return to his teaching job or keep his kiost job? Show your work!

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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