Question

The owner of a bicycle repair shop forecasts revenues of $192,000 a year. variable costs will be $58,000, and rental costs for the shop are $38,000 a year. depreciation on the repair tools will be $18,000.

a) $192,000
b) $118,000
c) $76,000
d) $38,000

Answer 1

The owner forecasts revenues of $192,000 a year and has variable costs of $58,000, rental costs of $38,000, and depreciation costs of $18,000. To find the owner's profit, we subtract the total costs from the revenues to get $78,000.

Step-by-step explanation:

The owner of the bicycle repair shop forecasts revenues of $192,000 a year. The variable costs are $58,000, rental costs for the shop are $38,000 a year, and depreciation on the repair tools is $18,000. To find the owner's profit, we need to subtract the total costs from the revenues:

Profit = Revenues - Total Costs

Profit = $192,000 - ($58,000 + $38,000 + $18,000)

Profit = $192,000 - $114,000

Profit = $78,000

Therefore, the owner's profit is $78,000 (option c).