Answer:
A. $1,020,000
B.$680,000
C.$340,000
D.$95,000
E.$245,000
Explanation:
A. Calculation for Jon’s total revenues
Using this formula
Jon's total revenue = Amount of fees per person × Number of persons
Let plug in the formula
Jon's total revenue = $1,200 × 850
Jon's total revenue=$1,020,000
B. Calculation for Jon’s explicit costs
Using this formula
Explicit costs = Amount of money that goes for instructors, maintenance, equipment,insurance, depreciation ×Number of persons
Let plug in the formula
Explicit costs= $800 ×850
Explicit costs =$680,000
C. Calculation for the his accounting profit
Using this formula
Accounting profit = Amount of Revenue - Explicit costs
Let plug in the formula
Accounting profit= $1,020,000 - $680,000 Accounting profit=$340,000
D. Calculation to List 2 in numbers 2 implicit costs that Jon has not included
Based on the information given we were told that he is foregoing an amount of $92,000 as wage and 1.5% interest on his amount of $200,000 which is a corporate bonds to start the business.
Hence
Jon total opportunity costs = $92,000 + (1.5%×$200,000)
Jon total opportunity costs = $92,000 +$3,000 Jon total opportunity costs=$95,000.
E. Calculation for Jon’s pure economic profit (or loss) in numbers
Using this formula
Economic profit = Accounting profit - opportunity costs
Let plug in the formula
Economic profit = $340,000-$95,000
Economic profit = $245,000
