Question 1 (10 Marks)

1. Khairul spends RM35,000 per annum on painting supplies and storage space. He recently received two job offers from a famous marketing firm - one offer was for RM 95,000 per year, and the other was for RM 105,000. However, he turned both jobs down to continue a painting career. If Khairul sells 20 paintings per year at a price of RM 8,000 each:
   1. What are his accounting profits?
   2. What are his economic profits?
2. Your manager realizes that incentive programs are important to promote efficiency and productivity of the workforce. The manager came up with the following wage packages to induce employees' motivation. As a head of human resource, which scheme would you suggest and which program will motivate the employees more?

• Wage scheme 1: Each employee will start at RM 17 per hour and will work eight hours per day.
• Wage scheme 2: each employee will receive RM 8 per hour and one-tenth of 1 percent of profits (expected profits are RM 90,000 per day if everyone puts out maximum effort).