do fast. Barney decides to quit his job as a corporate accountant, which pays $15,000 a month, and goes into business for himself as acertified public accountant.He runs his business from his converted garage apartment, which he could rent out for $315 a month if he wasn't using it as ahome office. He must purchase office supplies worth $60 a month, and his monthly electricity bill has increased by $40 now that he isworking out of his home office.After six months of working from home, Barney has earned an average of $17,000 per month.Instructions: Enter your answers as a whole number.a. What are Barney's average monthly accounting profits?$b. What are Barney's average monthly economic profits?$

Step 1:Accounting profits refer to the financial gains of a business or individual calculated using…

Answered: Barney decides to quit his job as a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Pat used to work as an aerobics instructor at the local gym earning $35,000 a year. Pat quit that job and started working as a personal trainer. Pat makes $50,000 in total annual revenue. Pat's only out- of-pocket costs are $12,000 per year for rent and utilities, $1,000 per year for advertising and $3,000 per year for equipment. Please enter your answers as whole numbers with no decimal places (ie. 5000 or $5000 not 5000.00 or "Five thousand dollars"). If you want to enter a negative number use a negative sign "-" and do not use parenthesis (ie. -2000 or -$2000 not (2000) or (-$2000)). What is Pat's accounting profit? What is Pat's economic profit? Did Pat make the right decision by becoming a personal trainer? (Yes or No)
Eustace H. Hogan has been an employee of Major Drilling for the last two years. He uses an office in his basement to fill out orders on the internet, call customers on his cell phone, and do paperwork related to his business. Because Major Drilling doesn't have an office in his city, this is his only place of business. His home office is 200 square feet in size and he thinks his house is 2,000 sqare feet in total size. His home costs for the year are listed below. He does not earn any commissions from his work. How much can be deduct from his employment income? (remember that deductions are negative(xxx.xx)) cell phone $600(used 100% for employment) internet $1,000(used for the whole home) power/hydro $2,000 mortgage principle $6,000(repayment of mortgage) pool installed $20,000(in the backyard)
A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $30,000 a year, and take over a restaurant space that he owns and currently rents to his brother for $24,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. What are his implicit costs? 54,000 52,000 106,000 none of the above
Until recently, Mark worked as a financial advisor, earning $65,000 annually. Then he inherited a piece of commercial real estate that had been renting for $14,000 annually. Mark decided to leave his job and operate a sea food restaurant in the space he inherited. At the end of the first year, his books showed total revenues of $300,000, and paid a total cost of $200,000 for food, utilities, cooks, and other supplies: Show all your work including formulas learned to support your answer for each of the following: A) Calculate his explicit costs: B) Calculate his implicit costs. C) Calculate his accounting profits. D) Calculate his economic profits.
Manisha could work for another firm making $10,000 per month, but she decides to open her own gourmet cheese store and pay herself $2,000 per month. In her first month of operations, she spends $6,000 on cheese, $1,000 on other items, and $2,500 on rent. She had a great opening month, and brought in revenues of $14,500. According to her accountant, what are Manisha's profits?
Mr. Afzal runs a small pottery ﬁrm. He hires one helper at $12,000 per year, pays annual rent of $5000 for his shop, and spends $20,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $4000 per year ifalternatively invested. He has been offered $15,000 per year to work as a potter for a competitor.He estimates his entrepreneurial talents are worth $3000 per year. Total annual revenue from pottery sales is $72,000. Calculate the accounting proﬁt and the economic proﬁt for Afzal’spottery firm.
Question 5 The sole proprietor of the "Books and More" bookstore receives all accounting profits earned by her firm and a $28,000-a-yearsalary she pays herself. She has a standing salary offer of $35,000 a year if she agrees to work for a large corporation. If she had invested her capital outside her own company, she estimates that would have returned $22,000 a year. Last year, her accounting profit was $50,000. What was her economic profit?
Don Juan Perez runs a seafood restaurant on the central coast. His total income last year was $150,000. The rent was $48,000 per year. His labour costs were $42,000 and materials, food and other variable costs were $20,000. Don Juan Perez was going to work as a cookbook writer where he would have earned $40,000 per year, or as a chef de cuisine in another restaurant, where he would have earned $35,000. The economic utility of Don Juan Perez is: Note: the answer is 0 (zero). Please clarify with calculations why this is the correct alternative.
Zubair purchases material by Rs. 20,000 per year and pays R. 10,000 for storage space. He recently received two job offers from a famous marketing firm—one offer was for Rs. 250,000 per year, and the other was for Rs. 190,000. However, he turned both jobs down to continue his business. If he sells 50 units of his product per year at a price of Rs. 10,000 each: a. What are her accounting profits? b. What are her economic profits?
John is the owner of “Down Town Pizza & Salad Bar” (NY). At the end of the year, John has the following information: Total Revenue = $290,000. Wages = $58,000, rent = $28,000, material & ingredients = $46,000, and utilities = $12,000. Also, Pizza Hut just offered him a job earning of $78,000. John invested $32,000 of his own savings in a new industrial oven. The oven at the end of the year can be sold at $18,000. The interest rate at the end of the year is 3.2%. According to this information, economic profits = $__
John is the owner of “Down Town Pizza & Salad Bar” (NY). At the end of the year, John has the following information: Total Revenue = $290,000. Wages = $58,000, rent = $28,000, material & ingredients = $46,000, and utilities = $12,000. Also, Pizza Hut just offered him a job earning of $78,000. John invested $32,000 of his own savings in a new industrial oven. The oven at the end of the year can be sold at $18,000. The interest rate at the end of the year is 3.2%. According to this information, what would you advice? John should continue the business because economic profits are positive. John should continue the business because accounting profits are positive. John should continue the business because accounting profits are higher than economic profits. John should not continue the business because economic profits are less than accounting profits.
Alex Kingsford is a mechanical engineer working for ABC Engineering in Melbourne. Alex owns aproperty in Dandenong, Victorian where he and his family are residing. He also runs a homebasedfood catering business, preparing food for local residents and school canteens. Cateringbusiness is well-structured. Alex works 15 days a month and earns a substantial income from thecatering services business. He is travelling from ABC Engineering workshop to his homebasedbusiness by car or sometimes Uber. When he lodged his tax return in July 2019, he has requested a deduction for a substantial amount of travelling expenses between the ABCEngineering workshop and home-based food business.Alex is now seeking your advice. With reference to relevant legislation and case law discusswhether Alex’s travelling expenses between the ABC Engineering workshop and his homebasedcatering business is an allowable deduction.

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