Q. 4 Your friend operates a variety store that provides an annual revenue of
$ 4,80,000. Each year he pays $25,000 in rent for the store, $15,000 in business taxes and $ 350,000 on products to sell. He estimates that he could put the $80,000 he has invested in the store into his friend’s restaurant business instead and earn an annual 20 percent profit on his funds. He also estimates that he and his family could earn a total annual wage of $ 90,000 if they had worked somewhere other than the store.
a. Calculate the total explicit costs and total implicit costs of running the variety store.
b. What is the accounting profit of the variety store?
c. What is the economic profit?
d. In what way economic profit is superior to accounting profit as an indicator of the overall performance of his business? Give the advantages of economic profit as a performance indicator, explain why the concept of economic profit is not often used in accounting.
e. Should your friend closing down this business? Why?
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course code Courses mba it mba notes past papers Results semester 3 solved assignments solved assignment solvedassignments.net 5538-CMA Business and Labour Laws economic environment for Business Accounting and Finance Marketing Management Quantitative Techniques Credit Management Project Management Financial Management Database Application Data Communication Marketing Managements MBA Notes MBA COL MBA Banking and Finance AIOU ASSIGNMENTS aiou mba AIOU OLDPAPERS aiou past papers allama iqbal open university
course code Courses mba it mba notes past papers Results semester 3 solved assignments solved assignment solvedassignments.net 5538-CMA Business and Labour Laws economic environment for Business Accounting and Finance Marketing Management Quantitative Techniques Credit Management Project Management Financial Management Database Application Data Communication Marketing Managements MBA Notes MBA COL MBA Banking and Finance AIOU ASSIGNMENTS aiou mba AIOU OLDPAPERS aiou past papers allama iqbal open university
course code Courses mba it mba notes past papers Results semester 3 solved assignments solved assignment solvedassignments.net 5538-CMA Business and Labour Laws economic environment for Business Accounting and Finance Marketing Management Quantitative Techniques Credit Management Project Management Financial Management Database Application Data Communication Marketing Managements MBA Notes MBA COL MBA Banking and Finance
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