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Please answer sections a-d. Section D is typed here while A-C are attached.    D)What does the economic profit value tell us, and what advice would you give Jarod about his busin

Please answer sections a-d. Section D is typed here while A-C are attached.    D)What does the economic profit value tell us, and what advice would you give Jarod about his busin

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please answer sections a-d. Section D is typed here while A-C are attached. 

 

D)What does the economic profit value tell us, and what advice would you give Jarod about his business?

a. Jarod's explicit costs total $ His implicit costs total $ b. What is Jarod's annual accounting profit? $ c. What is Jarod's annual economic profit? %24
Transcribed Image Text:a. Jarod's explicit costs total $ His implicit costs total $ b. What is Jarod's annual accounting profit? $ c. What is Jarod's annual economic profit? %24
Last year, Jarod left a job that pays $80,000 to run his own bike repair shop. Jarod's shop charges $65 for a repair, and last year the shop performed 5,000 repairs. Jarod's production costs for the year included rent, wages, and equipment. Jarod spent $60,000 on rent and $100,000 on wages for his employees. Jarod keeps whatever profit the shop earns but does not pay himself an official wage. Jarod has invested $30,000 of his savings in the business. His savings were earning an annual interest rate of 4 percent.
Transcribed Image Text:Last year, Jarod left a job that pays $80,000 to run his own bike repair shop. Jarod's shop charges $65 for a repair, and last year the shop performed 5,000 repairs. Jarod's production costs for the year included rent, wages, and equipment. Jarod spent $60,000 on rent and $100,000 on wages for his employees. Jarod keeps whatever profit the shop earns but does not pay himself an official wage. Jarod has invested $30,000 of his savings in the business. His savings were earning an annual interest rate of 4 percent.
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