Garth Grits works as an employee at Superior Foods, a local supermarket. As an employee, Garth earns $17 per hour and works 200 hours per month. Garth currently supplements his income with the interest he earns from having $30,000 in a savings account earning 5% annual interest. Instead of continuing to work for Superior Foods, Garth would like to start up his own dollar store called Just-a-Buck located in a strip mall close to his home. If Garth starts up Just-a-Buck, he would quit his job working for Superior Foods, and he would work full-time (200 hours per month) in his new business. To set up Just-a-Buck, Garth would have to use his $30,000 savings to buy the necessary equipment and make the appropriate renovations to the mall space he plans to rent. Garth hired an accountant who estimated the annual revenue and costs of Just-a-Buck as follows: Annual Store Sales $175000 Less Annual Expenses: Mall Rent (includes utilities) $10000 Cost of Goods Sold $85000 Employee Wages (not including Garth's wages) $13000 Business Taxes $1600 Based on the information provided above, the annual economic profit for Just-a-Buck is estimated to be $__. enter your response here.(Round your response to the nearest dollar.)
Garth Grits works as an employee at Superior Foods, a local supermarket. As an employee, Garth earns $17 per hour and works 200 hours per month. Garth currently supplements his income with the interest he earns from having $30,000 in a savings account earning 5% annual interest.
Instead of continuing to work for Superior Foods, Garth would like to start up his own dollar store called Just-a-Buck located in a strip mall close to his home. If Garth starts up Just-a-Buck, he would quit his job working for Superior Foods, and he would work full-time (200 hours per month) in his new business. To set up Just-a-Buck, Garth would have to use his $30,000 savings to buy the necessary equipment and make the appropriate renovations to the mall space he plans to rent.
Garth hired an accountant who estimated the annual revenue and costs of Just-a-Buck as follows:
|
Annual Store Sales |
$175000 |
|
Less Annual Expenses: |
|
|
Mall Rent (includes utilities) |
$10000 |
|
Cost of Goods Sold |
$85000 |
|
Employee Wages (not including Garth's wages) |
$13000 |
|
Business Taxes |
$1600 |
Based on the information provided above, the annual economic profit for Just-a-Buck is estimated to be $__. enter your response here.(Round your response to the nearest dollar.)
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