Question
John was a high school teacher earning $ 80,000 per year. He quit his job to start his own business in pizza catering.In order to
John was a high school teacher earning $ 80,000 per year. He quit his job to start his own business in pizza catering.In order to learn how to run the pizza catering business, John enrolled in a TAFE to acquire catering skills.
John'scourse was for 3 months. John had to pay $2,000 as tuition for the 3 months.
After the training, John withdrew $110,000 from his savings account. He had been earning 5 percent interest per year for this account. He also borrowed $50,000.00 from his friend whom he pays 6 percent interest per year.
John's first year of business can be summarised as follows:
Item
Amount $
Revenue
250,000
Labour cost
120,000
Pizza ingredients
50,000
Equipment
10,000
Calculate John's accounting profit and economic profit
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