Andie is a passionate baker who runs a small local bakery in Santa Rosa. Andie's bakery has been

gaining popularity in the community, thanks to her delicious pastries. However, like any business

owner, Andie faces various costs and financial considerations that impact her bakery's profitability.

To ensure accurate accounting and decision$-$making, it's important for Andie to understand the

various costs involved in her bakery operations.

Andie has recently made a significant investment in her baking business, purchasing high$-$quality

baking equipment and ovens totaling $$10,000.$ To finance this purchase, she secured a loan from

the bank covering $50\%$ of the investment, for which she pays $$1,000$ in interest annually. The

remaining $50\%$ was covered using her personal funds, which could have otherwise generated a $4\%$

annual interest if invested differently. Additionally, the yearly cost of using all economic capital

in her business amounts to $$15,000.$

Andie's bakery operations entail several financial aspects. She employs one helper, whose monthly

salary is $$2,000.$ The bakery operates from a rented space under a five$-$year contract, costing her

$$36,000$ annually. Monthly expenditures include $$800$ for ingredients and raw materials, along

with a $$200$ utility bill covering electricity and water. Despite receiving a tempting offer of $$50,000$

per year to work as a baker for a competitor, Andie values her entrepreneurial skills at $$15,000$

annually. Despite these costs, the bakery generates a monthly revenue of $$10,000$ from sales.

To accurately assess the profitability of her bakery, Andie needs to calculate both accounting profit

and economic profit per year. Get ready to dive into the world of bakery economics and assist

Andie in her entrepreneurial journey by finding the following information:

a$)$ List the different explicit costs and calculate the accounting profit per year.

b$)$ List the different implicit costs and calculate the economic profit per year.

c$)$ List the fixed costs and variable costs per year.

d$)$ Should Andie keep operating her business? Why?