Question
You turn down $32,800 per year job offer in order to open your own bakery business. You borrow $180,000 to purchase equipment payable in 10
You turn down $32,800 per year job offer in order to open your own bakery business. You borrow $180,000 to purchase equipment payable in 10 years at 10 % per year at an equal payment. You agree to pay constant payment of 20,000 reflecting interest and principal every year for 10 years. Total sales during your first year are $210,000. You hire temporary workers that account for a total labor cost of $100,000 the first year. The costs of raw materials used for your bakery are estimated at $55,000.
What are the fixed costs for the first year?
What are the variable costs for the first year?
What is the opportunity cost for the first year?
What is the accounting profit for the first year?
What is the economic profit?
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