Ask Question, Ask an Expert


Ask Business Economics Expert

Calculation of economic profit also accounting profit.

Bob also Jane decides to open their own business selling ergonomically correct office furniture which Jane has designed. Suppose they operate this business from leased office space near their home. Also suppose which they lease their computer equipment also data base software. The actual production of the furniture is subcontracted to various commercial factories as customer orders arrive also the unassembled kits are shipped via UPS to clients throughout the U.S. Their target marketplace is small businesses including those run out of home offices.

They have so much faith in the potential of Jane's designs which they quit corporate jobs in marketplace also MIS administration (which jointly had earned them $250,000 per yr) also sink $500,000 (.5 million) of their own funds into this venture at the start of their first yr to place advertising in trade journals also on the internet. (Suppose this $500,000 had previously been invested in a diversified portfolio which had been averaging a 10% annual rate of return before tax.) At the end of the yr they Computed which they had the following costs also revenues.

Total Revenues: $5.0 million
Payments to furniture subcontractors $3.5 million
Shipping Costs .1 million
Lease Payments on Office Space also Computer
Equipment &Software $ .1 million
Overhead Expenses: Insurance, utilities etc. $ .1 million
Advertising on Internet & Magazines
(Purchased at start of yr) $ .5 million
Additional Sales Expenses (phones, business travel, $ .2 million
Entertaining clients etc.)
Total Listed Costs = $4.5 million

a) Is Bob & Jane's economic profit different from their accounting profit? If so, describe how much economic profit did they earn during this first yr of operation?

b) Illustrate what are Bob & Jane's fixed costs during their first yr of operation?

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M916640

Have any Question? 

Related Questions in Business Economics

Chapter 1 managing changeq1 figure 176 shows how bad an

Chapter 1 Managing change Q1 Figure 1.76 shows how bad an implementation can become. Action needs to be taken to prevent this kind of situation. What would you recommend should be done? Q2 You are the project manager for ...

1 there is a small country whose domestic demand and supply

1) There is a small country whose domestic demand and supply for a good x are given below (where P is the price of X) [drawing a demand and supply graph may be helpful to you, but is not required.] D: P=100-Q S: P=10+2Q ...

Question 1 for the following situations calculate

Question 1 . For the following situations, calculate elasticity of demand and comment on the answer.                             When the price of commodity X was Rs. 12/-, 40 units it were demanded. When the price decre ...

Free trade and restricted trade - benefits and cost1-2

Free Trade and Restricted Trade - Benefits and Cost 1-2 paragraphs APA format/ no plagarism Using your own words, define both free and restricted trade. What do you feel are the benefits and the cost to having free trade ...

Assessment task descriptiontopicstudents will be required

ASSESSMENT TASK: DESCRIPTION Topic Students will be required to choose a specific enterprise (it should ideally be one with which they are somewhat familiar) and develop a sustainability indicators monitoring system for ...

1what is the production possibilities curve and how is it

1. What is the production possibilities curve and how is it useful? 2. What 4 factors contribute to determining any point in this model? 3. How would we apply this framework to the real world? 4. You are planning to expa ...

In the united states as in most countries we value the

In the United States, as in most countries, we value the benefits of a free and competitive market. This suggests an interesting question: what if there were to be no Antitrust laws or other regulations on business activ ...

Assignmentyou must submit 2 files to this link once done as

Assignment You must submit 2 files to this link once done as follows: Part 1) An MS Excel spreadsheet (.xls or .xlsx no other file formats will be accepted) use the dataset spreadsheet provided for the assignment and inc ...

Assignmentarticle reportplease select a marketing topic you

Assignment Article Report Please select a marketing topic you learned and then search in the Wall Street Journal (either online or hardcopy *) and select an article about that topic within the last 12 months. To do this, ...

Cite the sources used to answer this question provide the

Cite the source(s) used to answer this question. Provide the source(s) below your response and apply APA guidelines for references. 1) Class, is it possible for a business to show an accounting profit, but actually earn ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro