Please I need help with MRPL and Annual profit calculation.

Determines the marginal revenue product of labor for workers in an organization, given a wage rate

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7-15-21:Your MRPL is incorrect, Is the $100 more than the Marginal labor cost? Also should MRPL be less than, more than or equal to Marginal labor cost? Which number is closet to the marginal labor cost?

Determines how many workers an organization should hire, explaining the impact of the marginal revenue product of labor on organizational decision making

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7-15-21:Your numbers of workers recommended is incorrect. Once you get the correct MRPL, you will have the correct number of workers.

Determines the annual profit/loss of an organization based on profit-maximizing production

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7-15-21:Your said the annual profit is $110,500; but your calculation shows the annual profit as $84,500, which one is it? Please make sure only state the correct annual profit.

Please find beneath my working/s:

Course Name: ECO-20044-XF057 Economic Cost of Decisions

This letter is in response to our conversation to look after the financial information and make recommendations based on my analysis. My recommendations are as follows:

1. In the excel file I have calculated the marginal revenue product of labor in the organization. From the calculation, we can see that the Marginal Revenue keeps decreasing as more workers are employed. This is because of the law of the diminishing marginal returns under which once the business reaches the optimal level of utilization any additional unit will reduce the marginal returns. This is because once the optimal level is reached additional unit will incur more cost than revenue. From the excel file we can see that the total number of worker/s that should be employed by the business should be 5 because the MRPL at this level is $100 which is more than the Marginal labor cost, beyond this point the marginal revenue is less than the marginal labor cost, adding additional workers beyond this optimal level will result in less efficient operations (Investopedia, 2020).

2. Categorizing the economic costs are as follows:

a)Fixed Cost is a cost which does not change with the change in the output whereas Variable Cost is the cost which will change with the change in Output.

b)Rent: This is a fixed cost as this does not change with the change in output. This will remain same in the long run.

c)Wages: This is a fixed cost as this does not change with the change in output. This will change in the long run.

d)Raw Materials: This is a variable cost as the amount changes with the change in output. This will not change in the long run.

e)Energy Costs: This is a Semi-Variable cost in which some potion is fixed and some potion is variable. This will remain variable in the long run.

f)Phone and Internet Services: This is a fixed cost as this does not change with the change in output. This will not change in the long run.

The annual profit / loss is included in the excel file. The profit maximizing level of quantity is 6, since at this level Marginal Revenue is equal to the Marginal Cost which means that the company is able to recover the cost of the additional unit. If the business produces above this level, then the business will incur loss.

The Annual Profits will be $110,500. The profit is calculated beneath:

(Quantity x Price per Unit - Total Cost) x 5 working days x 52 weeks

= (6 x 325 - 1625) x 5 x 52

= $84,500

Opportunity Cost is the cost of letting go of one opportunity for another (Investopedia, 2020). In the current case the opportunity cost will be leaving the job in which you are earning $45,000. Economic Profit is the profit earned after deducting opportunity cost from the Net Profit (Investopedia, 2020). In the given case Economic Cost will be $39,500 (84,500 - 45,000) =$39,500.

Based on my findings and referencing the concepts of opportunity cost and economic profit. My recommendation is that you should quit your job as customer service specialist and face your coffee shop business squarely.