Brad Adams owns Brad’s Baking business. In the previous year, Brad’s baking had the following statement...
Brad Adams owns Brad’s Baking business. In the previous year, Brad’s baking had the following statement of revenues and cost.
Revenues = $300,000
Supplies = $70,000
Utilities = $10,000
Employee salaries = $20,000
Brad’s salary = $30,000
Brad always has an option of closing his baking business and renting out his building for $60,000 per year. Also, Brad has a job offer from a chain baking business offering him a salary of $50,000 per year and a local baking store offering him a salary of $25,000 per year. Brad can only work one job at any time. What is Brad’s Baking economic profit?
A $200,000
B. $100,000
C. $90,000
D. $80,000
E. $75,000
Homework Answers
Economic profit = Revenue - Implicit cost - Explicit cost
= 300000 - 70000 - 10000 - 20000 - 30000 - 60000 - (50000-30000)
= 90000
option C is correct answer
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