Question

You purchased equipment costing $1,000 to use for a lawn-mowing business to earn money for college during the summer. The first week in July, your college roommate asks you to help him paint a house the following week. If you agree, you will have no time to mow. Revenue from mowing would be $1,200. Your roommate has offered you $1,400 to help him paint. Additional mowing costs for the week would be $100, and additional painting costs would be $80. Transportation costs would be $50 for either job. What is your incremental net income for the week if you choose to paint?

Answer 1

$220

Step-by-step explanation:

For Mowing:

Revenue: $1,200

Additional cost: $(100)

Transportation cost : $(50)

Net Income : $1050

For Painting:

Revenue: $1,400

Additional cost: $(80)

Transportation cost : $(50)

Net Income : $1270

Incremental Net income = $1270 - $1050

= $220