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Flauer [41]
3 years ago
15

Gomez runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5,000 for his shop, and spends $2

0,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $4,000 per year if alternatively invested. He has been offered $15,000 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $3,000 per year. Total annual revenue from pottery sales is $72,000. Calculate the accounting profit and the economic profit for Gomez’s pottery firm.
Business
1 answer:
bearhunter [10]3 years ago
5 0

Answer: Accounting profit = $35000, Economic profit = $13000

Explanation:

Accounting profit = Revenue - Explicit cost

Accounting profit = Revenue - Cost of Help - Rent - Cost of materials

Accounting profit = $72000 - $12000 - $5000 - $20000

Accounting profit = $35000

Economic profit = Revenue - Explicit cost - Implicit Cost

Economic profit = Revenue - Cost of Help - Rent - Cost of materials - Renting equipment - working for competitors - talent

Economic profit = $72000 - $12000 - $5000 - $20000 - $4000 - $15000 - $3000

Economic profit = $13000

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patriot [66]

Hi, you've asked an incomplete question. However, the missing question read;

Version 1: George walks away. He never talks to Elaine or Jerry again.

Version 2: George confronts Elaine, saying “I am angry about what you have been saying. I do not want you spreading rumors about me. If you have a problem, please see me about it.”

Version 3: George yells at Elaine to shut u.p and then confronts his boss demanding to know why he’s going to be fired.

Version 4: George demands that Elaine tell him where she heard that. Elaine tells him not to worry about it and tries to crack a joke about how much the boss is late.

Answer:

  • <u>Version 1: non-confrontational</u>
  • <u>Version 2: cooperative</u>
  • <u>Version 3: confrontational</u>
  • <u>Version 4: confrontational and cooperative</u>

Explanation:

1. In this scenario it is evident that George avoids confrontation with Elaine. In fact, we are told that "[He] walks away..."

2. In this scenario, however, we notice a cooperative deposition between George and Elaine. He made this lear when he said, "...If you have a problem, please see me about it.”

3. Confrontation occurs in this scenario as we are told that "George... then confronts his boss demanding to know why he’s going to be fired. "

4.  By demanding "that Elaine tells him where she heard that" indicates confrontation. While Elaine's cracking a joke about how much the boss is late shows cooperation.

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Denise Hunter had Thomasville brand living room furniture and wanted to buy a particular chair of the same brand. She made a few
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Answer:

a specialty product

Explanation:

Based on the scenario being described within the question it can be said that For Denise, the chair can be categorized as being a specialty product. This is a product that very specific individuals will seek to purchase due to the product's unique characteristics or the individuals loyalty to a specific brand. Which is the case with Denise, since she is loyal to the brand and wanted a chair only from that specific brand.

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Bello, Inc., has a total debt ratio of .31.
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Answer:

a. Debt Equity ratio is calculated by dividing long term Debt by total equity of the company.

b.Equity Multiplier or P/E ratio=Market value per share/Earning per share.

Explanation:

a. Debt Equity ratio is calculated by dividing long term Debt by total equity of the company. The Debt Equity ratio can be calculated using the Market value of debt or equity. It can also be calculated using the book values of debt or equity which are included in the balance sheet of the company.

b. Equity multiplier is also known as price /earning ratio. A price/earnings ratio or P/E ratio is the ratio of the market value of a share to the  annual earnings per share. For every company whose shares are traded on a  stock market, there is a P/E ratio. For private companies (companies whose shares are not traded on a stock market) a suitable P/E ratio can be selected and  used to derive a valuation for the shares.

Equity Multiplier or P/E ratio=Market value per share/Earning per share.

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