Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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's course 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. Further, to start the business John used his own premises. He was receiving $12,000 from rent per year. Finally, to start the business John uses $50,000 he had been given by his father to go on holiday to USA.

John's first year of business can be summarised as follows:

Item Amount $

Revenue- Pizza Section 400,000

Revenue- Beverages Section 190,000

2 Cashiers (wages per worker) 55,000

Pizza ingredients 50,000

Manager 75,000

3 Pizza bakers (wages per baker) 60,000

Equipment 10,000

Based on your calculated accounting profit and economic profit, would you advise John to return to his teaching job?Show your work(10 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

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

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

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

Get Started

Recommended Textbook for

Economics

Authors: David Colander

7th Edition

0073402869, 9780073402864

More Books

Students also viewed these Economics questions

Question

Explain the steps involved in training programmes.

Answered: 1 week ago

Question

What are the need and importance of training ?

Answered: 1 week ago