What is the accounting profit

Reference no: EM131444143

Question: Accounting versus economic profits. (10 points) Christine owns an architecture firm. Last year, her business had the following statement of revenues and costs. (Anything that is not listed as revenue falls under costs.) As the sole owner of the business, Christine receives all its profit and does not formally pay herself a salary. She owns the building where her firm is located and can always close the firm 1 Revenues 360,000 Supplies 200,000 Utilities 10,000 Wages of employees 85,000 and rent the building to someone else for $10,000 per year. She has a job offer from the city to design their new city hall, and they are offering her a salary of $X per year. Assume that Christine can only choose one option (to run her business or work for the city). (a) (3 points) What is the accounting cost for Christine's firm? What is the accounting profit? (b) (3 points) What is the economic cost for Christine's firm? What is the economic profit? (c) (4 points) At the current offer of $X per year, Christine decides to take the city's job offer. What can we say about the city's offered salary if Christine is choosing optimally?

Reference no: EM131444143

Questions Cloud

Describe the key systems and processes used by ac gilber : BSBMGT608 Manage Innovation and continuous Improvement. Describe the key systems and processes used by AC Gilbert: Supply chain, Operational systems and Product/service delivery

Percent and the market risk premium : Stock Y has a beta of .95 and an expected return of 16.00 percent. Stock Z has a beta of .80 and an expected return of 9 percent. If the risk-free rate is 3.0 percent and the market risk premium is 10.6 percent, what are the reward-to-risk ratios ..

What is the goal of cash management : a. What is the goal of cash management and why do firms hold cash? b. What is meant by the terms precautionary and speculative balances? c. What are some specific advantages for a firm holding adequate cash balances?

How does this apply to government-created interest groups : We continually hear about interest groups in the news. Understanding this, what is the relationship between interest groups and government?How does this apply to government-created interest groups? In addition, what are the effects of bureaucrats as..

What is the accounting profit : Accounting versus economic profits. (10 points) Christine owns an architecture firm. Last year, her business had the following statement of revenues and costs.

Identify the actual responses that the agency performed : The success of problem-solving, like any attempt to address a community issue or concern, falls upon the individuals responsible for solving the problem. As a police officer or as a member of the community, you can use the problem-solving method a..

Risky investment for hippique shareholders : Hippique, which owns a stable of racehorses, has just invested in a mysterious black stallion with great form but disputed bloodlines. Some experts in horse flesh predict the horse will win the coveted Prix de Bidet; others argue that itshould be..

What role does the concept of exclusionary rule play : What role does the concept of exclusionary rule play in our criminal justice system?To what extent might one argue that the exclusionary rule has gone too far in protecting civil liberties at the expense of fighting crime?

Prepare a graduation project program for nursery : BIT415 - You need to prepare a Graduation Project program for Nursery and Plan and execute an interaction design project at advanced level in the chosen BIT field, individually or in small teams, within the time and resource limitations at hand.

User Account

All Pages