Question
Sally quit her job as an auto mechanic earning $60,000 per year to start her own business. To save money she operates her business
Sally quit her job as an auto mechanic earning $60,000 per year to start her own business. To save money she operates her business out of a small building she owns which, until she started her own business, she had rented out for $15,000 per year. She also invested her $20,000 savings (which earned a market interest rate of 6% per year) in her business. You are given the following information about the first year of her operations. [Show your work] Total revenue Cost of labor Cost of materials Equipment rental $120,000 40,000 15,000 5,000 1. Sally's economic cost of running her business. (2 marks) 2. Sally's accounting cost of running her business. (1 mark)
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Financial accounting
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas
8th Edition
9780135114933, 136108865, 978-0136108863
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