Javier and Keisha loved breakfast so much they decided to leave their jobs to start their own restaurant, opening Javi and Keisha’s Coffee and Quiches. Javi left his job which paid a $55,000 annual salary while Keisha left her $77,000 annual salary job. They both work full-time at the restaurant without drawing a salary, rather keeping any profits the restaurant may or may not earn.
Javi and Keisha invested $50,000 of their own money to start the cleverly named restaurant. This capital invested into their new business would have otherwise earned them $2,500 in interest income, had they left it in their high yield savings account paying 5% annually.
During the first year of operations Javi and Keisha’s Coffee and Quiches earned $500,000 in total revenue. Expenses for running the restaurant included labor costs of $165,000, food and supplies costs of $120,000, and $42,000 spent on rent, electricity, and utilities.
What was Accounting Profit for Javi and Keisha’s Coffee and Quiches over their first year in business? [ Select ] ["$154,000", "$38,500", "$173,000", "$96,000", "$327,000", "$134,500"]
What was Economic Profit for Javi and Keisha’s Coffee and Quiches over their first year in business? [ Select ] ["$173,000", "$327,000", "$38,500", "$96,000", "$154,000", "$134,500"]