Q4
(a)
After graduated, Nandeeta has open a bakery at Petaling Jaya. Since she is new in
business, she is quite worried about her bakery. This is due to the revenue from the
sales are below the total costs of running the bakery. At the same time, Amy has
already committed to paying for one year of rent, electricity, and employee salaries.
Consequently, even the business was to shut down, Nandeeta would still acquire
these costs until the year-end. In January, the business reported revenues of RM3,000
but incurred total costs of RM4,000, for a net loss of RM1,000. Nandeeta estimates
that February should experience revenues similar to that of January. In January,
Nandeeta's has spent money for the cost of as Table Q4(a) below;
Table Q4(a)
Items RM
Rent 1,000
Electricity 200
Employee salaries 500
Cost of flour, butter, sugar, and milk 1,800
Total cost of labor 500
Based on your opinion, explain whether she should close down the business or not.
(4 marks)
