Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3. Susan Lambert Case- Susan Lambert owns and operates her own landscaping firm. She is 31-years old, with a college degree, and she has been

image text in transcribed
3. Susan Lambert Case- Susan Lambert owns and operates her own landscaping firm. She is 31-years old, with a college degree, and she has been quite satisfied with her business. Susan's business operates in a warehouse owned by her parents. She currently has $400,000 of her own money invested in the business. Susan draws an annual salary of $35,000. They are letting her use the warehouse rent free as she gets her business started. Her parents could earn $25,000 if they rented the warehouse to someone else. Last year, her business had a total revenue of $335,000. She gave her accountant various receipts for payments for plants and materials, labor, utilities, taxes and insurance, and her draw for salary. Since the accountant can measure all of these costs, the total explicit costs were calculated to be $260,000. Assuming an opportunity of capital of 5%, and the opportunity cost of her own labor of ($45,000), calculate the following: Susan Lambert's accounting profit; What is the opportunity cost of Susan Labor? What is the Opportunity cost of her capital investment? What is the opportunity cost of the warehouse? Calculate Susan Lambert's economic profit (taking into account the opportunity cost of capital, labor, and the warehouse building where she is currently operating)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

Who should be involved?

Answered: 1 week ago

Question

Explain the various techniques of Management Development.

Answered: 1 week ago