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What is michael accounting profit or loss

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Reference no: EM131326672

Michael runs a business that sells pianos. In an average year he finds that he receives about $900,000 in sales of pianos. From this sales revenue, Michael must pay the manufacturer $600,000 and pays wages and utility bills totaling $200,000.  He owns the building where he shows and sells the pianos but could rent the building out for $160,000.  He gave up a job paying $50,000 to start his own business.

  1. What is Michael's accounting profit or loss?
  2. What is Michael's economic profit or loss?
  3. Did he make a good decision starting his own business?

Reference no: EM131326672

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