Suppose you and a friend are thinking about opening a fast food vending service at a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Suppose you and a friend are thinking about opening a fast food vending service at a nearby resort during your summer break. This will entail serving pizzas out of a vendor's truck. This is an alternative to working in a factory where you can each make $7000 over the summer break. A fully equipped truck could be leased for $9000. Insurance and other operating costs total $1000. Given your projected sale revenues of $33,000 you anticipate your variable costs to total $8,000. Together, you and your friend have just enough money to cover all of the summer's fixed and variable costs of the business in the bank. If you pull that money out of the bank, then you will have to collectively forego $1500 in interest for the summer. a. What would be the accounting profit for your business? b. What would be the economic profit for your business? c. Should you go into the business? Suppose you and a friend are thinking about opening a fast food vending service at a nearby resort during your summer break. This will entail serving pizzas out of a vendor's truck. This is an alternative to working in a factory where you can each make $7000 over the summer break. A fully equipped truck could be leased for $9000. Insurance and other operating costs total $1000. Given your projected sale revenues of $33,000 you anticipate your variable costs to total $8,000. Together, you and your friend have just enough money to cover all of the summer's fixed and variable costs of the business in the bank. If you pull that money out of the bank, then you will have to collectively forego $1500 in interest for the summer. a. What would be the accounting profit for your business? b. What would be the economic profit for your business? c. Should you go into the business?
Expert Answer:
Answer rating: 100% (QA)
a Accounting Profit Accounting profit is calculated by subtracting total explicit costs including bo... View the full answer
Related Book For
Project Management The Managerial Process
ISBN: 9781260570434
8th Edition
Authors: Eric W Larson, Clifford F. Gray
Posted Date:
Students also viewed these economics questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Suppose you and a friend are stranded on an island and must gather firewood and catch fish to survive. Through experience, you know that if each of you spends an entire day on either activity, the...
-
Firms raise capital from investors by issuing shares in the primary markets. Does this imply that corporate financial managers can ignore trading of previously issued shares in the secondary market?
-
In an effort to conserve energy in a heat-engine cycle, somebody suggests incorporating a refrigerator that will absorb some of the waste energy QL and transfer it to the energy source of the heat...
-
Yosef Company makes two products'guns and butter. Production cost data are as follows: Both the guns and the butter are manufactured in the same facility and, surprisingly, using the same equipment....
-
What is the most widely followed statistic in business? a. Gross profit b. Earnings per share c. Retained earnings d. Dividends
-
An investor purchases a stock for $38 and a put for $.50 with a strike price of $35. The investor sells a call for $.50 with a strike price of $40. What is the maximum profit and loss for this...
-
Blake was 21 years of age at the end of the year. During the year, he was a full-time college student. He also worked part-time and earned $8,000, which he used to pay all $6,000 of his living...
-
Four pesticides used in dormant California orchards are chlorpyrifos, diazinon, methidathion, and parathion. Environmental Science & Technology (Oct. 1993) reported the number of applications of...
-
Circuit diagram of a crane with the following parameters: m = 100 kg, D=200 mm, V = 45 cm, VH = 0 to 15 m/s, APGR = 3 bar APGA = 0.5 bar, Apvw = 3.5 bar pressure drop at the spool of the directional...
-
Describe how we calculate the percentage decline in national income resulting from the misallocation of labor in a model of monopoly unions. What is the dollar value of this allocative inefficiency...
-
In a particular economy the labor force (the sum of employed and unemployed workers) is fixed at 4 million. In this economy, each month, \(0.3 \%\) of the workers who were employed at the beginning...
-
The new Disney theme park in Shanghai opened in 2016. Develop a list of at least five ways other units of Disney can help promote and publicize the parks operations.
-
Explain why a senior-subordinated structure is a form of internal credit enhancement.
-
In a CMO structure with PAC bonds, explain the role of the support bonds.
-
At the market, Meyer buys a bunch of bananas for $0.65 per pound and a froze pizza for $4.99. the total or his purchase was $6.94, without tax. how many pounds of bananas did Meyer buy?
-
At the beginning of the year, Lam Ltd. had total assets of $800,000 and total liabilities of $500,000. Use this information to answer each of the following independent questions. (a) If Lam's total...
-
What is the difference between avoiding a risk and retaining a risk?
-
How did limiting work packages to one week help management identify problems sooner?
-
Why not use the waterfall method to develop new champions?
-
A shaft running at \(500 \mathrm{rpm}\) carries a pulley \(1 \mathrm{~m}\) diameter and drives another pulley by means of ropes with a speed ratio of 2:1. The drive transmits \(200 \mathrm{~kW}\)....
-
A flat belt drive is required to transmit \(20 \mathrm{~kW}\) at \(300 \mathrm{rpm}\) of \(2 \mathrm{~m}\) diameter pulley. The angle of contact is \(170^{\circ}\) and coefficient of friction between...
-
If the difference between tight and slack side tensions for a leather belt does not exceed \(100 \mathrm{~N} / \mathrm{cm}\) of width for a belt \(5 \mathrm{~mm}\) thick, find the maximum stress in...
Study smarter with the SolutionInn App