What happens to accounting and economic costs

Reference no: EM13223641

Before Sarah quit her job as a carpenter, she was earning $35,000 per year. She rented a building for $12,000 per year and opened a cabinet shop. She spends $148,000 per year for labor, materials, utilities, and advertising. (i) How much revenue will the business have to earn in order to break even in terms of business profit? (ii) How much revenue will the business have to earn in order to break even in economic terms? (iii) Now, suppose that Sarah needs operating cash, so she cashes in a $100,000 CD that was earning 5% per annum. Now, what happens to accounting and economic costs?

Reference no: EM13223641

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