PROBLEM 8B Accounting and Economic Profit Suppose there was a Potter who invested $50,000 of his own money and gave up $15,000/year working for someone else in order to run his own pottery business. He estimates his TR this year to be $92,000 and that he could have earned 10% on his money invested. He also feels that his business skills are worth $8,000/year. Other costs incurred include $14,000 paid to a helper, $5,000 in rent, and $20,000 in materials. Determine the economic and accounting profit.
8c Suppose last year you went into business buying and selling used textbooks. It cost you $10,000 to buy used books from students at the end of the term. The purchase was financed by a bank loan that has been repaid with an interest cost of $665. In addition, paid part-time help cost $7,000 for the year. You operated your business out of your garage and paid utility expenses of $500 annually. You bought a cash register, book shelves, etc. with $1,200 from your savings account. Your part-time help happened to be an accounting student who told you that you should make an allowance of $200/year for the wear and tear on the $1,200 of equipment you bought. You estimate that you worked 500 hours in your store but did not take any wage payment. The previous year you had worked in the campus bookstore and were paid $5 per hour. You used to rent your garage for $20 per month. You were getting an interest rate of 10% on your savings. REQUIRED: 1. List the explicit and the implicit costs. 2. Suppose you sold all the purchased books for $21,600. a. Did you make an accounting profit? (yes or no) ______________ How much? ______________ b. An economic profit? (yes or no) ______________ How much? __________
Answers
The Potter's pottery business resulted in an accounting profit of -$30,465 and an economic profit of -$38,265 when selling all purchased books for $21,600.
Accounting and Economic Profit
A. Economic Profit Calculation Economic profit = Total revenue - Total costs - Opportunity costs Total costs = $14,000 + $5,000 + $20,000 + $14,000 = $53,000 Opportunity costs = $15,000 + ($50,000 * 0.1) + $8,000 = $23,000 Total revenue = $92,000 Therefore, Economic profit = $92,000 - $53,000 - $23,000 = $16,000
B. Accounting Profit Calculation
Accounting Profit = Total revenue - Explicit costs Explicit costs = $14,000 + $5,000 + $20,000 + $14,000 + $7,000 + $1,200 + $665 + $200 = $52,065
Total revenue = $21,600Therefore, Accounting profit = $21,600 - $52,065 = -$30,465 Explicit costs: $52,065 Implicit costs: Opportunity cost of $5,000 (500 hours * $10 per hour) and $1,200 equipment depreciation
Allowance for the wear and tear on equipment is an implicit cost. The wear and tear allowance is equal to the opportunity cost of investing in other ventures since the $1,200 cash used to buy the equipment could have been used in other investments. It amounts to $200 per year.
Selling Price of all purchased books = $21,600
Did you make an accounting profit (yes or no) Yes
$21,600 - $52,065 = -$30,465
An economic profit(yes or no) No,Economic Profit = $21,600 - $53,665 - $5,000 - $1,200 = -$38,265
Thus, the answers are:Economic profit = $16,000
Accounting profit = -$30,465
Accounting profit (yes or no) = Yes
Accounting profit = $21,600 - $52,065 = -$30,465
Economic profit (yes or no) = No
Economic profit = $21,600 - $53,665 - $5,000 - $1,200 = -$38,265
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Related Questions
What is the biggest financial worry of most individuals and what can they do about it
Answers
General financial worries include: how to pay off debt, how to save money for college and school, how to invest money and where.
The solution would be to save money instead of having to take a loan from the bank, which will increase your debt. With proper planning one can avoid debt, if they plan for the future. Investment is something that should be studied and people would need to educate themselves about the market and investing. To save money for college and school, again proper financial planning is required and timely planning as well. One should plan years and months ahead of time when it comes to finance so that they don’t have to suffer from issues like debt and school or college fees.
) Briefly explain the difference between Regular Time Delay and Intra Assignment Delay control. [05 Marks]
Answers
Regular Time Delay and Intra Assignment Delay are two different types of control mechanisms used in telecommunications systems, specifically in the context of routing and transmission of data packets.
Regular Time Delay (RTD) is a control mechanism that introduces a predetermined delay or waiting time for each data packet before it is transmitted. This delay is typically constant and independent of the network conditions or traffic load.
The purpose of RTD is to provide a fair and equal opportunity for all packets to be transmitted, regardless of their arrival time. By introducing a fixed delay, RTD helps prevent congestion and ensures that packets are transmitted in a more orderly manner.
On the other hand, Intra Assignment Delay (IAD) is a control mechanism that dynamically adjusts the delay of each data packet based on the current network conditions and traffic load. Unlike RTD, IAD takes into account the real-time congestion levels and network performance metrics to determine the appropriate delay for each packet.
The goal of IAD is to optimize the network utilization and prioritize certain types of traffic based on their importance or quality of service requirements. By dynamically adjusting the delay, IAD can adapt to changing network conditions and allocate network resources more efficiently.
In summary, the main difference between Regular Time Delay and Intra Assignment Delay is that RTD introduces a fixed delay for all packets, while IAD dynamically adjusts the delay based on network conditions. RTD provides fairness, while IAD focuses on optimization and prioritization of traffic.
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Who would win Hawk Eye (Marvel) or The Green Arrow (DC)
Answers
Answer:
Buff animal crossing.
Explanation:
Answer:
Green Arrow
Explanation:
Which of the following statements is true about mortgages?
A. The adjustable mortgage has an adjustable term of years but
fixed interest rate.
B. The adjustable mortgage has adjustable rates over a set amount
of time.
C. The fixed mortgage has a fixed term of years but adjustable
interest rate.
D. The fixed mortgage has an adjustable interest rate over a set time.
Answers
The statement true about mortgage is B. adjustable mortgage has adjustable rates over a set amount of time.
A mortgage is basically a pact or agreement between the person who is providing a loan in the form of money and the person taking the loan in the form of money. It includes that if you fail to return the amount the lender has all the rights by which they can take away your property that you have submitted as a security deposit in form of property papers.
There are two types of mortgages on the basis of interest rates first is adjustable mortgages which has adjustable rates of interest through a fixed period of time. On the other hand is fixed mortgages which means there is a fixed rate of interest for a fixed period of time.
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What is entrepreneur?
Answers
Answer:
someone who is willing to take the necessary risk and uncertainties associated with setting up and managing a business or enterprise
Answer:
Someone who has they're own business. For example, my dad, he made a small company after he left the military called Triple L and he does different things like land work
Explanation:
One improvement of the chained consumer price index (CPI) over the traditional CPI is that:
a. the chained CPI more quickly takes into account new goods.
b. the chained CPI accounts for substitution between goods.
c. the chained CPI is "progressive," whereas the traditional CPI is "regressive."
d. the traditional CPI measures Engle's law but ignores the Paasche effect, which is included in the chained CPI.
e. The chained CPI more easily accounts for deflation.
Answers
The improvement of the chained consumer price index (CPI) over the traditional CPI is that it accounts for substitution between goods. This means that as prices of certain goods increase, consumers will switch to cheaper alternatives, and the chained CPI adjusts for this behavior.
The traditional CPI does not account for this, which can lead to an overestimation of inflation. While the chained CPI also takes into account new goods and more easily accounts for deflation, these are not the main improvements over the traditional CPI. The terms "progressive" and "regressive" are not applicable to either index, as they are not measures of income or tax rates. The Paasche effect is actually included in the traditional CPI, while the chained CPI measures Engle's law but also accounts for substitution.
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Let’s say that Major League Baseball has decided to put an expansion franchise in Portland, Oregon. Considering what you now know about branding, what would be a good nickname for that team? Why would that be a good nickname? Explain your choice using branding principles.
Answers
If Major League Baseball decided to put an expansion franchise in Portland, Oregon, a good nickname for that team would be the Portland Pioneers. This nickname would be a good fit for several reasons.
Firstly, it reflects the pioneering spirit of the city of Portland, which has a reputation for being a forward-thinking and innovative place. Secondly, it reflects the team's status as a new addition to the league, a pioneer in its own right.
From a branding perspective, the name Portland Pioneers also has several advantages. It is distinctive, memorable, and easy to say, which are all important qualities for a successful brand.
The name Portland Pioneers is a good choice for a new expansion franchise in the city of Portland. It captures the spirit of the city, reflects the team's status as a new addition to the league, and has strong branding potential. By choosing a name that is distinctive, memorable, and positive, the team can build a strong brand that will resonate with fans and help to establish its identity in the competitive world of professional sports.
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If the lender's good faith estimates are accurate, are they a reasonable amount for closing costs? why or why not? a. yes, because the lender estimated 3.08% of the home loan in closing costs which falls between 3 - 5%. b. yes, because the lender estimated 4.6% of the home loan in closing costs which does not fall between 3 - 5%. c. no, because the lender estimated 6.2% of the home loan in closing costs which does not fall between 3 - 5%. d. no, because the lender estimated 17.7% of the home loan in closing costs which does fall between 3 - 5%.
Answers
Yes, considering that the lender anticipated closing fees at 3.08% of the mortgage, or between 3 and 5%.
How much can the fees charged by a lender change between the loan estimate and the closing disclosure?Title company costs are normally from the lender's preferred title company and are disclosed on the Loan Estimate for disclosure purposes. These costs cannot increase by more than 10% if you choose the lender's chosen title provider.
What is a reliable expense for a mortgage's closing costs?Buyers should budget between 2% and 5% of the purchase price for closing charges overall. Usually, their share of the costs consists of: One or two origination points, or lender costs, which are equivalent to 1% to 2% of the loan amount and typically range from $750 to $1,200 for each point.
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Answer:
its C
Explanation:
What is profit in an economic system?
A. Profit is the investment a producer makes in the economy to achieve financial gain.
B. Profit is the net change in the value of the economy due to an exchange.
C. Profit is the financial gain resulting from an exchange.
D. Profit is the investment a consumer makes in the economy to achieve financial gain.
Answers
Answer:
I think D is correct answer
The profit in the economic system is the investment made by the consumer for accomplishing the financial gain.
The information related to the profit is as follows:
It is the surplus that comes after deducting the cost from the revenue made. It is the investment that should be made by the consumer for attaining financial gain.Therefore all the other options are incorrect.
Thus we can conclude that profit in the economic system is the investment made by the consumer for accomplishing the financial gain.
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Which industry is Amazon involved in ?
Answers
Answer:
Cloud computing e-commerce artificial intelligence consumer electronics digital distribution self-driving cars
Explanation:
Answer:
Cloud computing e-commerce
Explanation:
it is used for artificial intelligence or the use of robots
Incentives influence peoples economic decisions by:____.
Answers
People's economic decisions and actions are influenced by incentives. Consumers, businesses, employees, savers, investors, and other market participants receive signals from incentives on how to use their limited resources.
What effects does an incentive have on various people?Different people can be affected by an incentive in various ways. Because people often act in their own best interests, responses to incentives are predictable. People's behaviors alter predictably in response to changes in incentives.
What does the term "incentives" mean in economics?The economic theory of incentives is a useful framework for deriving explanations of human behavior. Rewards or punishments for behavior are considered incentives. Positive or negative incentives are also possible.
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15. What is the correct example of stewardship? Preventing soil erosion of agricultural land Preserving the existence of Sumatran tigers because you like them, even if it is highly unlikely that you w
Answers
The correct example of stewardship is preventing soil erosion of agricultural land. Option A is the correct answer.
Stewardship refers to the responsible and sustainable management of resources or assets. It involves taking care of something on behalf of others or for future generations. In the given options, preventing soil erosion of agricultural land aligns with the concept of stewardship. By implementing measures to prevent soil erosion, such as contour plowing, terracing, or cover cropping, farmers can protect the land and its productivity for future use. This demonstrates a responsible and proactive approach to managing the resource, ensuring its long-term viability.
Therefore, the correct answer is A) Preventing soil erosion of agricultural land.
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How is a credit union different from a bank?
O Acredit union offers services to companies instead of individuals.
A credit union only offers credit, it does not store money.
Acredit union is usually larger than a bank.
O A credit union is owned by its customers.
Answers
Answer:
a credit union is owned by its costumers (D)
Explanation:
i took the assignment!!
WILL GIVE BRAINLIEST
The preparation for discharging a patient from a medical facility is best begun _____.
A. when the individual is informed of discharge
B. 24 hours before discharge
C. at no particular time
D. at admittance to the facility
Answers
Answer:
D. at admittance to the facility
Explanation:
A student will decide to attend class when
A. The Marginal Cost in low
B. The Marginal Benefit of attending exceeds the marginal cost of attending
C. There is an attendance policy
D. The Marginal Benefit is positive
Answers
A student will decide to attend class when there is an attendance policy. Thus, option (c) is correct.
What is policy?The term policy refers to are the rules are the described in the details are the mention. The policy are the making follow to the country and the employees of the company. The policy are the making the company of the solving the issues.
A student was the decided to regularly attend lectures or classes was the main motive to fulfill the attendance policy. The attendance was the necessary to appear in the exam. An attendance was the help to gain good marks in the exams. An attendance policy was the best policy.
As a result, the student will decide to attend class when there is an attendance policy. Therefore, option (c) is correct.
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Sometimes the government will step in when they feel the need to encourage competition in
a particular industry and to break up companies that have nearly complete control over a
particular market. What is it called when the government initiates action against companies
that appear to have too much power?
A.consumer protection
B.OSHA
C.monopolies
D.antitrust suits
Answers
And employer has three employees who are each paid a salary of $1250 per month. He wants to give each of the three employees a $125 per month raise and he wants to hire an additional salaried employee. If the salary budget for these employees is $5325 per month, how much can he afford to offer the new employee?
Answers
Answer:
$1200
Explanation:
The three existing employees earn $1250 each. With an increase of $125, each will now earn $1,375.( $1250 + $125)
The new total for the three employees will be = $4,125
The employer has a budget of $5,325. After paying the three employees, the available balance will cater to the new employee.
The available balance will be $5,325 - $4,125
=$1200
On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $85,050 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts. Retained earnings, October 1 as $0.
Answers
ERNST CONSULTING Income Statement
For Month Ended October 31 is $850
ERNST CONSULTING Income Statement
For Month Ended October 31
Revenues
Consulting fees earned $15,040
Total revenues $15,040
Expenses
Rent expense $4,530
Salaries expense $8,090
Telephone expense $880
Miscellaneous expenses $690
Total expenses $14,190
Net income $850
($15,040-$14,190)
Inconclusion ERNST CONSULTING Income Statement For Month Ended October 31 is $850
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in business finance I did that
Answers
Answer:
u r sentence doesn't mean any sense
Answer:
what does your sentence mean?
Explanation:
Which describes absolute advantage?
A.) ability to produce more cheaply
B.) existence of lower opportunity costs than competitors
C.) performance of a particular productive task within an economic system
D.) best alternative given up by a particular production decision
Answers
A producer has an absolute advantage over its rivals when it can create an item or service in a higher volume for the same price, or in the same volume at a cheaper price.
Which describes absolute advantage?
The capacity of a producer to outproduce a rival in terms of production of a products or service. Comparative advantage: When a producer can create a commodity or service for less money than a rival.
The capacity to produce at a lower cost; a comparative advantage over rivals in that there are reduced opportunity costs; Performing a certain productive work well within an economic system is known as specialisation. Protectionism: The presence of restrictions on free commerce.
The capacity of a company to create more and sell more of an item or service than competitors while utilizing the same amount of resources is referred to as having an absolute cost advantage in economics.
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What is the biggest expectation from the civil service?
Answers
The biggest expectation from the civil service is work toward the betterment and protection of the people.
Civil service:
In general terms, civil service refers the permanent professional branches of a state's administration, excluding military and judicial branches and elected politicians.
Given,
Here we need to find the biggest expectation from the civil service.
As per the definition of civil service, the expectations towards the civil service are listed as follows:
=> selflessness,
=> integrity,
=> accountability,
=> openness,
=> leadership,
=> objective, and
=> honesty.
As a whole, the biggest expectations from the civil service is managing the resources given to them by the government and making use of them efficiently and effectively.
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Type the correct answer in the box. Spell all words correctly.
Ideally, what should more than one member of the family contribute to for a better financial position?
A family can have more than one person contributing to the household _______
for a better financial position.
Answers
A family can have more than one person contributing to the household income for a better financial position.
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Which agency is dedicated to overseeing the practices of banks, mortgage lenders, and credit-card companies?
a. The Federal Trade Commission.
b. The Securities and Exchange Commission.
c. The Fair Credit Reporting Bureau.
d. The Consumer Financial Protection Bureau.
Answers
The agency dedicated to overseeing the practices of banks, mortgage lenders, and credit-card companies is the Consumer Financial Protection Bureau (CFPB).
The Consumer Financial Protection Bureau (CFPB) is a government agency in the United States that is responsible for protecting consumers in the financial marketplace. It was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. The CFPB's primary role is to ensure that banks, mortgage lenders, and credit-card companies follow fair and transparent practices and treat consumers fairly. The agency enforces various federal consumer financial protection laws and regulations, conducts investigations, and takes legal action when necessary to address violations. The CFPB also provides educational resources and tools to empower consumers to make informed financial decisions. Its goal is to promote a fair and competitive consumer financial market place and prevent abusive or deceptive practices by financial institutions.
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Use The Table Below To Answer The Next Question. Year Employed Structural Frictional Cyclical Unemployed 2003Use the table below to answer the next question.Year Employed Structural Frictional Cyclical Unemployed2003 1,800 50 100 50 2002004 2,400 100 100 __ 3002005 2,000 ___ 150 180 5002006 2,660 40 __ 0 140Determine the number of people structurally unemployed for the year 2005.rev: 05_30_2018Multiple Choice1502201700
Answers
The Structural unemployed = -1750 The result is negative, it means that there are no structurally unemployed people in 2005. Therefore, the answer is 0.
The number of people fundamentally jobless in 2005 can be determined using the information provided by the subtracting the number of employed from the total of structural and frictional unemployed.
So, for 2005, structural unemployment equals the sum of the structural and frictional unemployment.
Unemployed structurally = (100 + 150) - 2000
Unemployed structurally = 250 - 2000
-1750 structural unemployed
Because the outcome is negative, there are no structurally unemployed people in 2005. As a result, the answer is 0.
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Based on the table, the number of people structurally unemployed for the year 2005 can be calculated by subtracting the frictional and cyclical unemployment numbers from the total number of unemployed people for that year.
Total Unemployed (2005) = 500
Frictional Unemployed (2005) = 150
Cyclical Unemployed (2005) = 180
Structural Unemployed (2005) = Total Unemployed - (Frictional Unemployed + Cyclical Unemployed)
Structural Unemployed (2005) = 500 - (150 + 180)
Structural Unemployed (2005) = 500 - 330
Structural Unemployed (2005) = 170
So, the number of people structurally unemployed for the year 2005 is 170.
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Under the Commerce Clause, it is possible for California to tax wine imports from Canada without any
concern regarding whether this tax conflicts with federal law.
True
False
Answers
Answer:
False
Explanation:
The answer is False. Under the Commerce Clause of the US Constitution, which gives the federal government the power to regulate commerce among the states, it may be possible for California to tax wine imports from Canada, but the tax must not conflict with federal law. In other words, if the tax would put Canadian wine imports at a disadvantage compared to domestic wine, it could be considered unconstitutional. To avoid this, California would need to ensure that its tax applies to both domestic and foreign wines in the same way.
All of the techniques sellers use to inform people about and motivate them to buy their products or services is called:
Answers
I think is the correct answer please forgive me if I am incorrect I am truly sorry if I am incorrect
Question 2(Multiple Choice Worth 5 points)
(02.06 MC)
In general, what kind of people earn the most money?
O People with skills that are in high demand and high in supply
O People with skills that are in high demand but low in supply
O People with skills that are in low demand and low in supply
People with skills that are in low demand but high in supply
Answers
They earn the most money since skills also follow the law of supply and demand, so consumers are willing to pay more due to low supply
Which economic effect does a central bank hope to achieve by buying back large amounts of treasury security
Answers
A. It hopes to reduce the amount of money available for lending.
Explanation:
Usually, the central bank(Federal reserve) control the supply of money in circulation in the economy so that the nation's economy would be healthy. One of the ways through which the federal reserve controls the quantity of money in circulation is by selling or purchasing of government securities through a process known as open market operation.
If the federal reserve sells government securities such as treasury bills, in large quantities, its aim is to reduce the amount or quantity of money available to commercial banks for lending, hence mop up the quantity of money in circulation.
Also, if the federal reserve buys government securities, its aim is to make more money available in large quantities to commercial banks and other institutions, hence have more cash to lend people.
The economic effect that central bank are trying to effect by the process of buying back large amounts of treasury security is bring reduction to amount of money available for lending.
Treasury notes as well as bonds are securities that brings about payment of fixed rate of interest which is usually done every six months till the security reach a stage of maturity.The central bank do buy large amounts of treasury security so that the money that can be available for lending can be reduced.Therefore, this process are put in place to balance the economy.
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c. Analyse why trade unions are likely to welcome an increase in the money supply. (6)
Answers
Answer:
Prolonged inflation educates trade-union leaders to bargain in real terms by allowing for expected price movements, so that incomes rapidly adjust to, or even anticipate, changes in the price level.
I am not sure about this answer.
Increased money supply often results in lower interest rates, which encourages more investment and more money in consumers' hands, which in turn increases consumption. Trade unions respond by increasing their orders for raw materials and increasing production.
What is Trade Union?A trade union commonly referred to as a union, is a group of employees who are dedicated to "maintaining or improving the conditions of their employment," such as obtaining better wages and benefits, improving working conditions, raising safety standards, establishing complaint procedures, and creating rules governing employees' status (rules governing promotions, just-cause conditions for termination, etc.).
They also work to protect the integrity of their trade by increasing bargaining power.
The trade union negotiates labor contracts (also known as collective bargaining agreements) with employers on behalf of its members, known as the rank-and-file, through an elected leadership and negotiating committee.
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After adjusting your seat, your _____ should be as close as possible to the backrest.
A. hands
B. arms
C. bottom
D. legs
Answers
Answer:
C. Bottom is the answer
Explanation:
My parents would always yell at me to scooch backwards in the car if I was leaning too far forward. I don't need to know how to drive to know this.
This is a question about driving right? Lol, cause if it's not, sorry.