Production costs

Question 27 Marks

John was a high school teacher earning a net salary of $54,000 per year. After working for one year, he quit his job to start his own milk bar business. In order to start the business, John borrowed $40,000.00 from the bank and was paying 5 percent interest per year. Also, John withdrew $ 50,000 from his savings account. He had been earning 5 percent interest per year for this account.

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

Item Amount $ Revenue- Fresh milk section 250,000 Revenue- Yogurt Section 180,000 2 Cashiers expense (wages per worker) (40,000) Truck expense (80,000) Manager expense (60,000) Milk sales assistant expense (30,000) Equipment expense (50,000) Motorcycle expense to ease movement in (30,000) city 2 milk freezers (cost per freezer) (5000)