opportunity cost means the NEXT BEST alternative, only the teaching qualifies as the opportunity cost, not the interior decorator. So that means any data on the decorating should not be considered here. She is really giving up teaching to do the store, not decorating. Therefore, the calculations are as follows:

Revenue:430,000

Accounting Costs:120,000 (labor) + 206,000 (travel and merchandise) = 326,000

Accounting profit:$104,000(430000 - 120000 - 206000)

Opportunity Costs:80,000(forgone teaching income) +

24,000 (forgone rental income) = 104,000

Economic Profit:$0(430000 -120000 - 206000 - 80000 - 24000)

To return to her former job as a teacher, what minimum salary should she take and why? Also, suppose your mother indicated that she had spent $20,000 to do some research and a few other things prior to setting up the business. How does this factor into her economic or accounting profit calculation? These costs are known as sunk costs.