Explore BrainMass
Share

Accounting vs. economic costs

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Tara is considering leaving her current job, which pays $56000 per year, to start a new company that makes special pens. She thinks she can sell 160000 pens during year 1 at $20@. With overhead costs and operating expenses coming to $3160000, she expects a profit margin of 25%. This margin is 6% larger than that of her biggest competitor.

a) If she decides to embark on her new venture, what will be her accounting costs during year 1?

b) Suppose her estimated selling price is lower than originally projected. How much revenue would she need in order to earn a positive accounting profits? Positive economic profits?

© BrainMass Inc. brainmass.com March 21, 2019, 4:50 pm ad1c9bdddf
https://brainmass.com/economics/cost-benefit-analysis/accounting-versus-economic-costs-199847

Solution Preview

a) If she decides to embark on her new venture, what will be her accounting costs during year 1?

Joe's accounting costs are those costs, which ...

Solution Summary

This discusses the concept of Accounting versus economic costs.

$2.19