In 2021 Terry Brady, the legendary athlete from Indiana, decided to leave his job as head football coach at Mattoon High School to open Brady Advantage, his own sporting goods store, in Terre Haute. By locating Brady Advantage halfway between St. Louis and Indianapolis, Brady hoped to attract customers from both large metropolitan markets. A partial income statement for Brady Advantage follows: 2021 Revenues Revenue from sales of goods and services........ $210,000 Operating costs and expenses: Cost of products and services sold.................... $82,000 Selling expenses.............................................. $6,000 Administrative expenses................................... $12,000 Total operating costs and expenses................ $100,000 Income from operations........................................ $110,000 Interest expense (bank loan)................................ $14,000 Non-recurring expenses to start business.............. $8,000 Income taxes....................................................... $16,000 Net income.......................................................... $72,000 Terry Brady’s coaching job at Mattoon High paid $55,000 of annual salary and benefits. To get the sporting goods store opened, Brady used $70,000 of his personal savings, which was earning a 1.5 percent annual rate of return. Brady opened his store in a building that he owned in Terre Haute. Prior to opening his store, the building was rented for $27,000 per year. In 2021, Brady Advantage incurs $_______________ of total explicit costs for using market-supplied resources. In 2021, the opportunity cost of Brady’s equity capital is $______________. The total implicit cost of using owner-supplied resources in 2021 is $____________. The total opportunity cost of resources used by Brady Advantage in 2021 is $_______________. The total economic cost in 2021 is $_______________. The economic profit for Brady Advantage in 2021 is $_______________.
In 2021 Terry Brady, the legendary athlete from Indiana, decided to leave his job as head football coach at Mattoon High School to open Brady Advantage, his own sporting goods store, in Terre Haute. By locating Brady Advantage halfway between St. Louis and Indianapolis, Brady hoped to attract customers from both large metropolitan markets. A partial income statement for Brady Advantage follows:
|
|
2021 |
|
Revenues |
|
|
Revenue from sales of goods and services........ |
$210,000 |
|
Operating costs and expenses: |
|
|
Cost of products and services sold.................... |
$82,000 |
|
Selling expenses.............................................. |
$6,000 |
|
Administrative expenses................................... |
$12,000 |
|
Total operating costs and expenses................ |
$100,000 |
|
Income from operations........................................ |
$110,000 |
|
Interest expense (bank loan)................................ |
$14,000 |
|
Non-recurring expenses to start business.............. |
$8,000 |
|
Income taxes....................................................... |
$16,000 |
|
Net income.......................................................... |
$72,000 |
Terry Brady’s coaching job at Mattoon High paid $55,000 of annual salary and benefits. To get the sporting goods store opened, Brady used $70,000 of his personal savings, which was earning a 1.5 percent annual
- In 2021, Brady Advantage incurs $_______________ of total explicit costs for using market-supplied resources.
- In 2021, the opportunity
cost of Brady’s equity capital is $______________. - The total implicit cost of using owner-supplied resources in 2021 is $____________.
- The total opportunity cost of resources used by Brady Advantage in 2021 is $_______________. The total economic cost in 2021 is $_______________.
- The economic profit for Brady Advantage in 2021 is $_______________.
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