Najah runs a small clothing firm. She hires one helper at $18,050 per year, pays annual rent
Question:
Najah runs a small clothing firm. She hires one helper at $18,050 per year, pays annual rent of $6,450 for her shop, and spends $19,255 per year on materials. She has $58,000 of her own funds invested in equipment (materials, machine, and so forth) that could earn her $5,000 per year if alternatively invested. She has been offered $14,585 per year to work as a clothier business for a competitor. She estimates her entrepreneurial talents are worth $4,056 per year. Total annual revenue from clothes sales is $90,202.
Required:
Apply the cost production in pure competition theory to calculate the accounting profit and economic profit for Najah clothing firm.
Financial accounting
ISBN: 978-0136108863
8th Edition
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas