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5 July, 00:33

Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. Christine could earn $6,000 per year as a tax preparer. What is the annual accounting profit of her cookie jar business?

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  1. 5 July, 00:43
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    Complete question:

    Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000.

    Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. Christine could earn $6,000 per year as a tax preparer. What is the annual accounting profit of her cookie jar business?

    Answer: $36,000

    Explanation:

    Amount from personal saving balance = $5000

    Annual interest rate on saving = 1%

    Annual revenue fro selling cookie jar = $90,000

    Explicit cost of cookie jar materials = $54,000

    Amount to be earned as a tax preparer = $6000

    Accounting profit = Total revenue - Explicit cost

    Accounting profit = $90,000 - $54,000

    Accounting profit = $36,000
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