Managerial Economics

use Problems 1 Rebeckah S. Lamb BUS640: Managerial economicals Michael Thirtle June 4, 2012 Chapter 1: Applied Problem 1 At the beginning of the year, an auditory hotshot engineer quit his job and gave up a take in of $175,000 per year in order to cash in ones chips his knowledge business, vigorous Devices, Inc. The new company builds, installs, and maintains custom audio equipment for businesses that ask high-quality audio systems. A partial income statement for Sound Devices, Inc., was shown. To ninny started, the possessor of Sound Devices spent $100,000 of his personal savings to assume for some of the capital equipment used in the business. In 2010, the owner of Sound Devices could have earned a 15 per centum return by investing in stocks of early(a) new businesses with gamble levels similar to the risk level at Sound Devices. a. What argon the supply overt, total implicit, and total stinting costs in 2010? The total explicit costs are the cost of products and function sold ($355,000). b. What is accounting net income in 2010? The accounting profit is the total revenue ($970,000) minus explicit costs ($355,000).

then; Total Revenue - Explicit be = Accounting win $970,000- $355,000= $615,000 c. What is economic profit in 2010? The economic profit is the total revenue ($970,000) minus the total economic cost, which in this sample includes total operating costs ($555,000), In terest get knock off ($45,000), Legal Expe! nses ($28,000) and Income Taxes ($165,000) for a total economic cost of $793,000. because; Total Revenue - Total sparing Cost = Economic Profit $970,000 - $793,000 = $177,000 d. Given your answer in part c, mensurate the owners last to leave his job to start Sound Devices....If you essential to get a full essay, order it on our website: OrderEssay.net

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