John was a high school teacher earning a net salary of $54,000 per year. After working...
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John was a high school teacher earning a net salary of $54,000 per year. After working for one year, he quit his job to start his own milk bar business. In order to start the business, John borrowed $40,000.00 from the bank and was paying 5 percent interest per year. Also, John withdrew $ 50,000 from his savings account. He had been earning 5 percent interest per year for this account. John's first year of business can be summarised as follows: Item Revenue- Fresh milk section Revenue- Yogurt Section 2 Cashiers expense (wages per worker) Truck expense Manager expense Milk sales assistant expense Equipment expense Motorcycle expense to ease movement in city 2 milk freezers (cost per freezer) Amount $ 250,000 180,000 (40,000) (80,000) (60,000) (30,000) (50,000) (30,000) (5000) Based on your calculations of accounting profit and economic profit, would you advise John to return to his teaching job or continue with the milk bar business? Show your work! (7 marks) John was a high school teacher earning a net salary of $54,000 per year. After working for one year, he quit his job to start his own milk bar business. In order to start the business, John borrowed $40,000.00 from the bank and was paying 5 percent interest per year. Also, John withdrew $ 50,000 from his savings account. He had been earning 5 percent interest per year for this account. John's first year of business can be summarised as follows: Item Revenue- Fresh milk section Revenue- Yogurt Section 2 Cashiers expense (wages per worker) Truck expense Manager expense Milk sales assistant expense Equipment expense Motorcycle expense to ease movement in city 2 milk freezers (cost per freezer) Amount $ 250,000 180,000 (40,000) (80,000) (60,000) (30,000) (50,000) (30,000) (5000) Based on your calculations of accounting profit and economic profit, would you advise John to return to his teaching job or continue with the milk bar business? Show your work! (7 marks)
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Answer rating: 100% (QA)
Ans Accounting profit 88000 Economic profit 31500 Since economic profit is positive John should ... View the full answer
Related Book For
Auditing A Practical Approach with Data Analytics
ISBN: 978-1119401742
1st edition
Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton
Posted Date:
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