Question

Chad runs a coffee shop that has annual revenues of $300,000, supply costs of $60,000, and employee salaries of $60,000. He has the option of renting out the coffee shop for $80,000 per year, and he has three outside offers from competitors to work as a senior barista at Starbucks (for an annual salary of $30,000), at Simon's coffee house (for an annual salary of $40,000), and at Peet's coffee shop (for an annual salary of $60,000). He can only hold one job at a time. What should Chad do?

Answer 1

Step-by-step explanation:

Option 1

Revenue from coffee -300,000

Cost of sales - 60,000

Salaries - 60,000

Net income 180,000

Option 2

Rental income - 80,000

Option 3

Rental income - 80,000

Salary at Starbuck- 30,000

110,000

Option 4

rental income 80,000

Salary at Simon 40,000

120,000

Option 5

Rental income 80,000

salary at Peet 60,000

140,000

Looking at all the options before Chad , his highest income compared to others options would come form running his own coffee shop,which is 180,000 . Therefore , it is advised that he should continue to run his own shop.