23, Abiola, a programmer, earned $35,000 in 2015, but in 2016, he began to manufacture body boards. After one year, he submitted the following data to his accountant. He stopped renting out his apartment for $3,500 a year and used it as his factory. The market value of the apartment increased rom $70,000 to $71,000. He spent $50,000 on materials, phone, utilities, etc. He leases machines for $10,000 a year. He paid $15,000 in wages. He used $10,000 from his savings account, which pays 5% a year interest. He borrowed $40,000 at 10% a year from the bank. he sold $160,000 worth of body boards. Normal profit is $25,000 a year. Question: Calculate Abiola's economic profit in 2016, and if Abiola's accountant recorded the depreciation on Abiola's apartment during 2016 as $7,000, calculate Abiola's accounting profit or loss in 2016.
23, Abiola, a programmer, earned $35,000 in 2015, but in 2016, he began to manufacture body boards. After one year, he submitted the following data to his accountant. He stopped renting out his apartment for $3,500 a year and used it as his factory. The market value of the apartment increased rom $70,000 to $71,000. He spent $50,000 on materials, phone, utilities, etc. He leases machines for $10,000 a year. He paid $15,000 in wages. He used $10,000 from his savings account, which pays 5% a year interest. He borrowed $40,000 at 10% a year from the bank. he sold $160,000 worth of body boards. Normal profit is $25,000 a year. Question: Calculate Abiola's economic profit in 2016, and if Abiola's accountant recorded the depreciation on Abiola's apartment during 2016 as $7,000, calculate Abiola's accounting profit or loss in 2016.
Chapter8: Production And Costs
Section8.2: Two Sides To Every Business Firm
Problem 4ST
Related questions
Question
![23, Abiola, a programmer, earned $35,000 in 2015, but in 2016, he began
to manufacture body boards. After one year, he submitted the following
data to his accountant.
He stopped renting out his apartment for $3,500 a year and used it as his
factory. The market value of the apartment increased rom $70,000 to
$71,000. He spent $50,000 on materials, phone, utilities, etc. He leases
machines for $10,000 a year. He paid $15,000 in wages. He used
$10,000 from his savings account, which pays 5% a year interest. He
borrowed $40,000 at 10% a year from the bank. he sold $160,000 worth
of body boards. Normal profit is $25,000 a year.
Question:
Calculate Abiola's economic profit in 2016, and if Abiola's accountant
recorded the depreciation on Abiola's apartment during 2016 as $7,000,
calculate Abiola's accounting profit or loss in 2016.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad0ee59d-2fd4-466e-92b6-47aeabf2da87%2F1e409391-a62e-4a5f-b8c5-0a3118932947%2Fql0nu6e_processed.jpeg&w=3840&q=75)
Transcribed Image Text:23, Abiola, a programmer, earned $35,000 in 2015, but in 2016, he began
to manufacture body boards. After one year, he submitted the following
data to his accountant.
He stopped renting out his apartment for $3,500 a year and used it as his
factory. The market value of the apartment increased rom $70,000 to
$71,000. He spent $50,000 on materials, phone, utilities, etc. He leases
machines for $10,000 a year. He paid $15,000 in wages. He used
$10,000 from his savings account, which pays 5% a year interest. He
borrowed $40,000 at 10% a year from the bank. he sold $160,000 worth
of body boards. Normal profit is $25,000 a year.
Question:
Calculate Abiola's economic profit in 2016, and if Abiola's accountant
recorded the depreciation on Abiola's apartment during 2016 as $7,000,
calculate Abiola's accounting profit or loss in 2016.
![O c. Acct. Profit: $78,000; Economic profit: $13,000
O a. Economic profit: $18,000, and Accounting profit $ 74,000.
O d. Acct. Profit: $68,000, Economic profit: $23,000
O b. Acct. Profit: $53,000, Economic profit: $58,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad0ee59d-2fd4-466e-92b6-47aeabf2da87%2F1e409391-a62e-4a5f-b8c5-0a3118932947%2Fdvndw9l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:O c. Acct. Profit: $78,000; Economic profit: $13,000
O a. Economic profit: $18,000, and Accounting profit $ 74,000.
O d. Acct. Profit: $68,000, Economic profit: $23,000
O b. Acct. Profit: $53,000, Economic profit: $58,000
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