Jamie is considering leaving her current job, which pays $75,000 per year, to start a new company that develops applications for smart phones.  Based on market research, she can sell about 50,000 units during the first year at a price of $4 per unit.  With annual overhead costs and operating expenses amounting to $145,000, Jamie expects a profit margin of 20 percent.  During the first year, Jamie is using her savings to cover total costs. Current annual rate of return on saving is 2.1%. This margin is 5 percent larger than that of her largest competitor, Apps, Inc.  If Jamie decides to embark on her new venture,  Accounting costs:  Economic costs:   Opportunity costs:

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
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Chapter8: Cost Analysis
Section: Chapter Questions
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Jamie is considering leaving her current job, which pays $75,000 per year, to start a new company that develops applications for smart phones.  Based on market research, she can sell about 50,000 units during the first year at a price of $4 per unit.  With annual overhead costs and operating expenses amounting to $145,000, Jamie expects a profit margin of 20 percent.  During the first year, Jamie is using her savings to cover total costs. Current annual rate of return on saving is 2.1%. This margin is 5 percent larger than that of her largest competitor, Apps, Inc. 

If Jamie decides to embark on her new venture, 
Accounting costs: 

Economic costs:  

Opportunity costs: 

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