Question

Suppose that a small hair styling salon had revenues of $150,000 in a given year. The owner spent $10,000 on utilities, $60,000 on supplies (shampoo, conditioner, hair coloring and other chemicals, etc.), and $50,000 on equipment (mirrors, chairs, scissors, curling irons, etc.), including maintenance. The owner could have earned $50,000 working at another salon. 11) Refer to Scenario 13-22. What is the accounting profit for the hair styling salon?

Answer 1

Given that a small hair styling salon had revenues of $150,000 in a given year. The owner spent $10,000 on utilities, $60,000 on supplies, and $50,000 on equipment, including maintenance. The total profit of the salon should 150,000 –( 10,000 + 60,000 + 50,000) = $30,000. The owner could have earned more if he work at another salon.