Question

You purchased equipment costing $1,000 to use for a lawn-mowing business to earn money for college during the summer. The first week in July, your college roommate asks you to help him paint a house the following week. If you agree, you will have no time to mow. Revenue from mowing would be $1,200. Your roommate has offered you $1,400 to help him paint. Additional mowing costs for the week would be $100, and additional painting costs would be $80. Transportation costs would be $50 for either job. What is your incremental net income for the week if you choose to paint?

Answer 1

Answer:

$220

Explanation:

For Mowing:

Revenue:                                      $1,200

Additional cost:                              $(100)

Transportation cost :                      $(50)

Net Income               :                  $1050

For Painting:

Revenue:                                      $1,400

Additional cost:                              $(80)

Transportation cost :                      $(50)

Net Income               :                  $1270

Incremental Net income =   $1270 -  $1050

                                            = $220