Explain working for a regional home builder

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Reference no: EM13105490

A few years ago a construction manager earning $70,000/ year working for a regional home builder obvious to open his own home building company. He took $100,000 out of one of his investment accounts that had been earning around 6% a year as well as used that money to start up the business. He worked hard for the first year signing one employee his only salary cost for the business was $40,000 paid to his employee, as well as generated total sales of $1,000,000. Total material as well as subcontracted labour costs for the year were $900,000. Compute accounting profit. Explain what are the opportunity costs for the manager of being in this business relative to returning to his old job? What is the economic profit of the business?

Reference no: EM13105490

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