FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Chapter 6: Exercise II Jeremy worked at a bank with a monthly salary of $1,500. He decided to quit his job and open a bookstore in his neighborhood. He now pays $500 in rent, $80 in utilities, and S120 in wages every month. a. Suppose Jeremy sells 100 books at the price of $30 every month. i. What is the monthly total revenue of Jeremy's bookstore? ii. How much accounting profit does Jeremy make every month? iii. How much economic profit does Jeremy make every month? b. If Jeremy had not quit his job at the bank, he could have been promoted and got a pay raise of 30 percent. i. Will there be any changes in the monthly explicit and implicit costs of Jeremy's bookstore? ii. Will there be any changes in the accounting profits of Jeremy's bookstore? iii. Will there be any changes in the economic profits of Jeremy's bookstore? © 2015 Pearson Education, Ltd.
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Transcribed Image Text:Chapter 6: Exercise II Jeremy worked at a bank with a monthly salary of $1,500. He decided to quit his job and open a bookstore in his neighborhood. He now pays $500 in rent, $80 in utilities, and S120 in wages every month. a. Suppose Jeremy sells 100 books at the price of $30 every month. i. What is the monthly total revenue of Jeremy's bookstore? ii. How much accounting profit does Jeremy make every month? iii. How much economic profit does Jeremy make every month? b. If Jeremy had not quit his job at the bank, he could have been promoted and got a pay raise of 30 percent. i. Will there be any changes in the monthly explicit and implicit costs of Jeremy's bookstore? ii. Will there be any changes in the accounting profits of Jeremy's bookstore? iii. Will there be any changes in the economic profits of Jeremy's bookstore? © 2015 Pearson Education, Ltd.
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