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AVprozaik [17]
2 years ago
5

Reggie owns and operates a cheese shop in the village of Somerset. Although Reggie has a degree in mechanical engineering and co

uld easily go to work for his brother's company earning $ 76000 a year, his true passion is for cheese. Consider the list of Reggie's revenue and expenses from last year. Please use the information provided to answer the questions. Revenue from 2010 $ 90000 Rent $ 18000 Equipment $ 6000 Supplies $ 3000
Business
1 answer:
Artyom0805 [142]2 years ago
3 0

Answer:

A. 27,000

B. 77,000

Explanation:

What is Reggie's accounting profit?

REVENUE - EXPENSES AND DEPRECIATION

90000-18000-6000-3000=63000

What is Reggie's economic profit?

REVENUE - EXPENSES AND DEPRECIATION - IMPLICIT COSTS

90000-18000-60000-3000-76000 = -13000

1) accounting profit = TR - explicit cost

= 90,000 - 63,000

= 27,000,

2) economic profit = TR - economic cost

= 90,000-(13,000)

= 77,000

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