Assume James was a secondary teacher in the Philippines earning AUD 1,464.82 per month (Philippines Peso equivalent).
Question:
Assume James was a secondary teacher in the Philippines earning AUD 1,464.82 per month (Philippines Peso equivalent). In August, after the typhoon Haiyan devastation, James decided to migrate to Melbourne, Australia to start a Mango Juice And Cake Bakery kiosk.
Before starting the business, James’ uncle decided to offer him a bicycle shop. James calculated he could earn AUD 1,500 per month selling bicycles. But James wanted to succeed in his Mango Juice and Cake Bakery business so he decided to use the bicycle shop for the mango juice and cake bakery kiosk.
During the month of August, James summarised the costs of the business. The table below represents the August business summary.
a) Calculate James’ total cost and average total cost for each section (cake and mango juice section). Exclude implicit costs.
b) Calculate James’ variable cost and average variable cost for each section. Exclude implicit costs.
c) Assume James sells each cake pack at AUD 5.00. Also, assume James sells each mango pack at AUD 2.00. Calculate James’ accounting profit and economic profit for the month of August.