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Guest
Peggy-Sue’s cookies are the best in the world, or so I
hear. She has been offered a job by Cookie Monster,
Inc., to come to work for them at $125,000 per year.
Currently, she is producing her own cookies, and
she has revenues of $260,000 per year. Her costs are
$40,000 for labor, $10,000 for rent, $35,000 for ingredients,
and $5,000 for utilities. She has $100,000 of
her own money invested in the operation, which, if she
leaves, can be sold for $40,000 that she can invest at
10 percent per year.
a. Calculate her accounting and economic profits.
b. Advise her as to what she should do
hear. She has been offered a job by Cookie Monster,
Inc., to come to work for them at $125,000 per year.
Currently, she is producing her own cookies, and
she has revenues of $260,000 per year. Her costs are
$40,000 for labor, $10,000 for rent, $35,000 for ingredients,
and $5,000 for utilities. She has $100,000 of
her own money invested in the operation, which, if she
leaves, can be sold for $40,000 that she can invest at
10 percent per year.
a. Calculate her accounting and economic profits.
b. Advise her as to what she should do