Accounting and Economic Profit Activity

Jolene is opening a doggy daycare named "Little Barks." She is leaving her current job where she makes $75,000 per year in order to start her own business. The building that Little Barks will be located in is already owned by Jolene, as she was leasing this location out to a tenant for $5,000 per month. Additionally, Jolene will have to pay $10,000 for business permits and insurance in case one of the dogs bites another dog or a person. Jolene will need to buy dog food, toys, beds, and other miscellaneous equipment that will cost an estimated $20,000. She expects revenue to be $125,000 a year. Calculate Jolene's accounting and economic profit. Address whether Jolene should open Little Barks, or stay at her current job. Fully explain how you came to your answers.

Calculate Costs, Profit, and Loss Activity

Jamal opened a Mega Fitness center. He signed a year-long lease for a building that will cost $500 per month. He bought all of his own equipment for $3,000. Jamal's labor costs for two trainers will be $4,000 a month. Jamal already contracted with 100 clients. Each client will pay $60 per month. What are Jamal's fixed costs, variable costs, average fixed costs, average variable costs, and average total costs? Calculate what Jamal's profit or loss would be.