Nana Akua is an auditor in Ghana who earned GH18,000 in 2013. But Nana Akua enjoys cooking and in 2016, she stopped the auditing job and started a catering business. At the end of the first year of operation, she submitted the following information to her accountant:

She stopped renting out her shop for GH5,000 a year and used it as her catering centre.

She spent GH7,000 on materials, phone and utilities.

She bought cooking utensils for GH12,000.

She paid GH5,000 in wages

She used GH15,000 from her savings account at the bank, which pays 10% a year interest.

Assignment 1 contd

She borrowed GH12,000 paying an interest of 25% a year from the bank.

She sold GH75,000 worth of food during the year.

Normal profit is GH6,000 a year.

Economic depreciation for the year is GH1,500 Required:

a. Calculate Nana Akuas explicit costs.

b. Calculate Nana Akuas implicit costs.

c. Calculate Nana Akuas accounting profit for the year. d. Calculate Nana Akuas economic profit

Demand