Lee, a programmer, earned P350,000 in 2010, but in 2011, he began to manufacture computer monitors. After one year, he submitted the following data to his accountant. • He stopped renting out his cottage for P35,000 a year and used it as his factory. • The market value of the cottage increased from P700,000 to P710,000. • He spent P50,000 on materials, phone, utilities, etc. • He leased machines for P100,000 a year. • He paid P150,000 in wages. • He used P100,000 from his savings account, which pays five 5% interest a year. • He borrowed P400,000 at 10% a year from the bank. • He sold P1,600,000 worth of monitors. Normal profit is P250,000 a year. Compute for the following: • Lee's explicit costs • Lee's implicit costs.ru Lee's economic profit
Lee, a programmer, earned P350,000 in 2010, but in 2011, he began to manufacture computer monitors. After one year, he submitted the following data to his accountant. • He stopped renting out his cottage for P35,000 a year and used it as his factory. • The market value of the cottage increased from P700,000 to P710,000. • He spent P50,000 on materials, phone, utilities, etc. • He leased machines for P100,000 a year. • He paid P150,000 in wages. • He used P100,000 from his savings account, which pays five 5% interest a year. • He borrowed P400,000 at 10% a year from the bank. • He sold P1,600,000 worth of monitors. Normal profit is P250,000 a year. Compute for the following: • Lee's explicit costs • Lee's implicit costs.ru Lee's economic profit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Lee, a programmer, earned P350,000 in 2010, but in 2011, he began to manufacture computer
monitors. After one year, he submitted the following data to his accountant.
• He stopped renting out his cottage for P35,000 a year and used it as his factory.
• The market value of the cottage increased from P700,000 to P710,000.
• He spent P50,000 on materials, phone, utilities, etc.
• He leased machines for P100,000 a year.
• He paid P150,000 in wages.
• He used P100,000 from his savings account, which pays five 5% interest a year.
• He borrowed P400,000 at 10% a year from the bank.
• He sold P1,600,000 worth of monitors.
Normal profit is P250,000 a year.
Compute for the following:
• Lee's explicit costs
• Lee's implicit costs.ru
Lee's economic profit
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