Gomez runs a small pottery firm. He hires one helper at $14,500 per year, pays annual rent of $7,500 for his shop, and spends $18,000 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 $5,000 per year if alternatively invested. He has been offered $23,000 per year to work as a potter for a competitor. He estimates he could use his talents to earn an additional $6,000 per year in consulting fees if he were working full time as a potter. Total annual revenue from pottery sales is $86,000.
Instructions:
A. Calculate the accounting profit for Gomez’s pottery firm.
B. Now calculate Gomez's economic profit.
Answers: 2
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Gomez runs a small pottery firm. He hires one helper at $14,500 per year, pays annual rent of $7,500...
Computers and Technology, 29.08.2019 04:20
Computers and Technology, 29.08.2019 04:20
Computers and Technology, 29.08.2019 04:20
Computers and Technology, 29.08.2019 04:20