Due to lack of food after the flood devastation in Pakistan, Khan, a Secondary School teacher...

    

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Due to lack of food after the flood devastation in Pakistan, Khan, a Secondary School teacher decided to start a milk and bread business in July 2022. Assume Khan's business expenditure and income is converted from Pakistani Rupee to Australian Dollar (AUD). Khan started his business by utilising his bank savings worth AUD 120,000 from which he was earning 5% interest per month. Also, Khan uses his own premises from which his rental earnings are AUD 5,000 per month. Further, in order to manage his business Khan decided to quit his job from which he was earning AUD 5000 per month. Finally, the table below represents Khan's July business summary. Item Milk section cashflow 1 Milk truck Milk stainless cans Milk cooler 2 litre milk packs (Cost depends on milk bought. Assume average per month) Office desk 2 computers (Assume each computer costs 2500) 2 cashiers (wages depend on hours worked. Assume this is the average monthly wage per worker) Bread Section cash flow 2 Bread Mixers (Cost per bread mixer of 14,000 per machine) Commercial refrigerator 2 Support Workers (wages depend on hours worked. Assume 3000 is the average monthly wage per worker) Cost of monthly bread dough sweeter ingredients (Depend on demand- Assume this is the average expenditure per month) Bread van Dough proofer machine Bread heavy duty oven Cost (AUD) 90,000 20,000 50,000 5,000 300 2,500 4,000 14,000 4,000 3000 5,000 25,000 15,000 6,000 2 Sheet pan racks (Cost per sheet pan rack is 1000) Bakeware tools (Assorted bakeware tools include: bread pans, muffin tins, cake pans, knives and spatulas) 1000 5,000 i. Assume on average 95,000 litres of milk are purchased and sold for the month of July. Also assume that the selling price per litre of milk is AUD 2.00 ii. Assume on average 20,000 loaves of bread are produced and sold per month for month of July. Also assume that the selling price per loaf of bread is AUD 2.50 REQUIRED: Use the table to answer the following: a. Calculate Khan's fixed cost and average fixed cost for each section. Exclude implicit cost. 2 marks ANSWER a: b. Calculate Khan's total cost and average total cost for each section. Exclude implicit cost. 2 marks ANSWER b: c. Calculate Khan's accounting profit and economic profit for the month of July. 7 marks ANSWER c: Due to lack of food after the flood devastation in Pakistan, Khan, a Secondary School teacher decided to start a milk and bread business in July 2022. Assume Khan's business expenditure and income is converted from Pakistani Rupee to Australian Dollar (AUD). Khan started his business by utilising his bank savings worth AUD 120,000 from which he was earning 5% interest per month. Also, Khan uses his own premises from which his rental earnings are AUD 5,000 per month. Further, in order to manage his business Khan decided to quit his job from which he was earning AUD 5000 per month. Finally, the table below represents Khan's July business summary. Item Milk section cashflow 1 Milk truck Milk stainless cans Milk cooler 2 litre milk packs (Cost depends on milk bought. Assume average per month) Office desk 2 computers (Assume each computer costs 2500) 2 cashiers (wages depend on hours worked. Assume this is the average monthly wage per worker) Bread Section cash flow 2 Bread Mixers (Cost per bread mixer of 14,000 per machine) Commercial refrigerator 2 Support Workers (wages depend on hours worked. Assume 3000 is the average monthly wage per worker) Cost of monthly bread dough sweeter ingredients (Depend on demand- Assume this is the average expenditure per month) Bread van Dough proofer machine Bread heavy duty oven Cost (AUD) 90,000 20,000 50,000 5,000 300 2,500 4,000 14,000 4,000 3000 5,000 25,000 15,000 6,000 2 Sheet pan racks (Cost per sheet pan rack is 1000) Bakeware tools (Assorted bakeware tools include: bread pans, muffin tins, cake pans, knives and spatulas) 1000 5,000 i. Assume on average 95,000 litres of milk are purchased and sold for the month of July. Also assume that the selling price per litre of milk is AUD 2.00 ii. Assume on average 20,000 loaves of bread are produced and sold per month for month of July. Also assume that the selling price per loaf of bread is AUD 2.50 REQUIRED: Use the table to answer the following: a. Calculate Khan's fixed cost and average fixed cost for each section. Exclude implicit cost. 2 marks ANSWER a: b. Calculate Khan's total cost and average total cost for each section. Exclude implicit cost. 2 marks ANSWER b: c. Calculate Khan's accounting profit and economic profit for the month of July. 7 marks ANSWER c:

Answer rating: 100% (QA)

Answer 1 We must determine Khans total revenue and deduct his total expenses to determine his accounting profit Lets dissect it stepbystep Milk Section Cash Flow Explanation Milk truck AUD 90000 Milk ... View the full answer