Sally quit her job as an auto mechanic earning $60,000 per year to start her own...
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Sally quit her job as an auto mechanic earning $60,000 per year to start her own business. To save money she operates her business out of a small building she owns which, until she started her own business, she had rented out for $15,000 per year. She also invested her $20,000 savings (which earned a market interest rate of 6% per year) in her business. You are given the following information about the first year of her operations. [Show your work] Total revenue Cost of labor Cost of materials Equipment rental $120,000 40,000 15,000 5,000 1. Sally's economic cost of running her business. (2 marks) 2. Sally's accounting cost of running her business. (1 mark) Sally quit her job as an auto mechanic earning $60,000 per year to start her own business. To save money she operates her business out of a small building she owns which, until she started her own business, she had rented out for $15,000 per year. She also invested her $20,000 savings (which earned a market interest rate of 6% per year) in her business. You are given the following information about the first year of her operations. [Show your work] Total revenue Cost of labor Cost of materials Equipment rental $120,000 40,000 15,000 5,000 1. Sally's economic cost of running her business. (2 marks) 2. Sally's accounting cost of running her business. (1 mark)
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Related Book For
Financial accounting
ISBN: 978-0136108863
8th Edition
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas
Posted Date:
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