PROBLEMS1. Below is an annual income statement of Julian's Online Clothing Store. Julian is alreadyworking full time in the store and P300,000 of his money has been used (invested) to buythe store and stock it with merchandise. Julian just turned down a job offer to manage astore that will pay him P250,000 per year. He did not pay himself a salary in 2019.According to the data:A. Is Julian's Online Clothing Store generating a positive, zero, or negative accountingprofit for 2019? Show supporting calculations.B. What do you think are Julian's implicit costs (i.e., what are these benefits Julian iswilling to forego)?C. Assume that the interest was 12% annually in the money/funds market recalculateJoe's total opportunity costs.D. What was the economic profit (or loss of Julian's Online Clothing Store in 2019?E. Evaluate the business performance based on economic profit.RevenuesCostsSalesP550,000 Wholesale clothing20,000 EquipmentLaborP300,00020,000150,00010,000Inventory AdjustmentUtilities and insuranceTotal RevenuesP570,000 Total Costs$480,0002. Consider the following data of Speedy Delivery Service. Speedy DS needs to find out theproductivity and associated cost of hiring various levels of drivers. Output is measured indeliveries to clients (i.e., # of delivery rides to and from client destination) per week andeach driver is paid P4000 per week (Speedy's only variable cost). Complete the tablebelow and answer the following questions.LaborOutputMPАРAVCMC1818332452686.76780882A. What is AP of four drivers?B. What is the MP of the 6th driver?C. What is the AVC of providing 80 rides per week?What is the MC of increasing delivery services from 52 to 68 rides per week?E. What is the additional amount of output gained from hiring the fourth worker?D.

As per guidelines, we will answer the first question with three subpart question.

1. Below is an annual income statement of Julian's Online Clothing Store. Julian is already working full time in the store and P300,000 of his money has been used (invested) to buy the store and stock it with merchandise. Julian just turned down a job offer to manage a store that will pay him P250,000 per year. He did not pay himself a salary in 2019. According to the data: A. Is Julian's Online Clothing Store generating a positive, zero, or negative accounting profit for 2019? Show supporting calculations. B. What do you think are Julian's implicit costs (i.e., what are these benefits Julian is willing to forego)? C. Assume that the interest was 12% annually in the money/funds market recalculate Joe's total opportunity costs.

1. Below is an annual income statement of Julian's Online Clothing Store. Julian is already working full time in the store and P300,000 of his money has been used (invested) to buy the store and stock it with merchandise. Julian just turned down a job offer to manage a store that will pay him P250,000 per year. He did not pay himself a salary in 2019. According to the data: A. Is Julian's Online Clothing Store generating a positive, zero, or negative accounting profit for 2019? Show supporting calculations. B. What do you think are Julian's implicit costs (i.e., what are these benefits Julian is willing to forego)? C. Assume that the interest was 12% annually in the money/funds market recalculate Joe's total opportunity costs.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

PROBLEMS
1. Below is an annual income statement of Julian's Online Clothing Store. Julian is already
working full time in the store and P300,000 of his money has been used (invested) to buy
the store and stock it with merchandise. Julian just turned down a job offer to manage a
store that will pay him P250,000 per year. He did not pay himself a salary in 2019.
According to the data:
A. Is Julian's Online Clothing Store generating a positive, zero, or negative accounting
profit for 2019? Show supporting calculations.
B. What do you think are Julian's implicit costs (i.e., what are these benefits Julian is
willing to forego)?
C. Assume that the interest was 12% annually in the money/funds market recalculate
Joe's total opportunity costs.
D. What was the economic profit (or loss of Julian's Online Clothing Store in 2019?
E. Evaluate the business performance based on economic profit.
Revenues
Costs
Sales
P550,000 Wholesale clothing
20,000 Equipment
Labor
P300,000
20,000
150,000
10,000
Inventory Adjustment
Utilities and insurance
Total Revenues
P570,000 Total Costs
$480,000
2. Consider the following data of Speedy Delivery Service. Speedy DS needs to find out the
productivity and associated cost of hiring various levels of drivers. Output is measured in
deliveries to clients (i.e., # of delivery rides to and from client destination) per week and
each driver is paid P4000 per week (Speedy's only variable cost). Complete the table
below and answer the following questions.
Labor
Output
MP
АР
AVC
MC
1
8
18
3
32
4
52
68
6.
76
7
80
8
82
A. What is AP of four drivers?
B. What is the MP of the 6th driver?
C. What is the AVC of providing 80 rides per week?
What is the MC of increasing delivery services from 52 to 68 rides per week?
E. What is the additional amount of output gained from hiring the fourth worker?
D.

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