Kanesha is an entrepreneur and has recently opened her first coffee shop, The Co

Question

Kanesha is an entrepreneur and has recently opened her first coffee shop, The Coffee Cat. Kanesha pays $4,800 rent each month, $3,100 for monthly employee payroll, and $1,800 for supplies each month. She was planning on selling several of her own tables and chairs on Craigslist for $1,100, but instead she brought them to The Coffee Cat. Additionally, Kanesha quit working as an accountant where she was earning $61,000 per year to open up the shop. If the shop earns $150,000 in revenue this year, calculate annual:

Instructions: Enter your responses as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Hint: be sure to calculate explicit costs as annual costs.

a. Accounting profits. $ _____

b. Economic profits. $ ______

Explanation / Answer

Accounting Profit=150000-4800×12-3100×12-1800×12

=33600

Economic Profit=33600-61000-1100=-28500

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