Bella's Bakery hires you to evaluate the company's financial position. The data below provides information on the company's annual costs and revenues. Bella spends at least 50 hours per week managing her bakery. If she closed the bakery, she could work for another bakery and earn $20,000 per year. Bella also owns the building housing the bakery and could rent it out for $25,000 per year if she decided to close her business. Category Wages Interest Paid on Loans Amount ($) 30,000 4,000 Other Expenditures for Inputs 40,000 Total Revenue 110,000 Calculate the economic cost and economic profit for Bella's Bakery. Would an accountant come to the same conclusion about the profitability of this business? Explain.
Bella's Bakery hires you to evaluate the company's financial position. The data below provides information on the company's annual costs and revenues. Bella spends at least 50 hours per week managing her bakery. If she closed the bakery, she could work for another bakery and earn $20,000 per year. Bella also owns the building housing the bakery and could rent it out for $25,000 per year if she decided to close her business. Category Wages Interest Paid on Loans Amount ($) 30,000 4,000 Other Expenditures for Inputs 40,000 Total Revenue 110,000 Calculate the economic cost and economic profit for Bella's Bakery. Would an accountant come to the same conclusion about the profitability of this business? Explain.
Chapter9: Deductions: Employee And Self-employed-related Expenses
Section: Chapter Questions
Problem 42P
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Please provide answer this financial accounting question
Transcribed Image Text:Bella's Bakery hires you to evaluate the company's financial position. The data below
provides information on the company's annual costs and revenues. Bella spends at least
50 hours per week managing her bakery. If she closed the bakery, she could work for
another bakery and earn $20,000 per year. Bella also owns the building housing the
bakery and could rent it out for $25,000 per year if she decided to close her business.
Category
Wages
Interest Paid on Loans
Amount ($)
30,000
4,000
Other Expenditures for Inputs 40,000
Total Revenue
110,000
Calculate the economic cost and economic profit for Bella's Bakery. Would an
accountant come to the same conclusion about the profitability of this business? Explain.
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