Ken Owens Construction specializes in small additions and repairs. His normal charge is $400/day plus materials. Due to his physical condition, David, an elderly gentleman, needs a downstairs room converted to a bathroom. Ken has produced a bid for $5000 to complete the bathroom. He did not provide David with the details of the bid. However, they are shown here.
- The town’s social services has asked Ken if he could reduce his bid to $4000. Should Ken accept the counter offer?
B. How much would his income be reduced?
C. If the town’s social services guaranteed him another job next month at his normal price, could he accept this job at $4000?
Trending nowThis is a popular solution!
Chapter 10 Solutions
Principles of Accounting Volume 2
Additional Business Textbook Solutions
Horngren's Accounting (11th Edition)
Principles of Accounting Volume 1
Cost Accounting (15th Edition)
Financial Accounting, Student Value Edition (4th Edition)
Horngren's Accounting (12th Edition)
Managerial Accounting (5th Edition)
- Catherine buys and sells real estate. Two weeks ago, she paid $300,000 for a house on Pine Street, intending to spend $50,000 on repairs and then sell the house for $400,000. Last week, the city government announced a plan to build a new landfill on Pine Street just down the street from the house Catherine purchased. As a result of the city’s announced plan, Catherine is weighing two alternatives: She can go ahead with the $50,000 in repairs and then sell the house for $290,000, or she can forgo the repairs and sell the house as it is for $250,000. What should Catherine do?arrow_forwardJoe sends a check for $218 to the University by July 1 of every year to cover the cost of two tickets for each of the 7 home games plus $50 for a parking permit. Joe has difficulty finding friends to accompany him to the games. However, he is adamant that he must go to the games because he has paid for the tickets. Friends insist that the cost of the tickets is a sunk cost and that the decision should be based on future costs that would be different between alternatives – going to the game and not going to the game. Friends have calculated the fuel for the 6-hour round trip costs $15 and two meals while away from home for the game can easily cost $30 or more. Required Write a list to Joe outlining the relevant costs associated with a trip to the game.arrow_forwardI hire Susan to sell my house. I tell her that I'm hoping to get $200,000 for the house. She tells me she needs $2,000 to make repairs on the house before it is listed for sale. I give her the $2,000. She takes my money but never makes the repairs. The house sells for $220,000. If Susan is ordered to pay restitution, she will have to pay $ 2000arrow_forward
- Tom accepted a written offer from Jill to build a house for Jill. Tom agreed to a price of $800,000. Two months into the construction, Tom realizes that he will barely make a profit on the deal. Tom informs Jill that he will not continue building her house unless Jill agrees to pay Tom an additional $200,000. Jill and Tom agree in writing that Jill will pay Tom an additional $200,000 to complete construction of the house. After Tom completes the construction of the house, Jill refuses to pay Tom the additional $200,000. Tom sues Jill alleging breach of contract with regard to the additional $200,000. Based on the facts stated in this questiona. None of the answers are correctb. Tom will win as long as he is not a minorc. Tom will lose because there was no contract for this $200,000.d. Jill will lose because there was a contract for this $200,000arrow_forwardAnnie Russell, a student at Tech, plans to open a hot dog stand inside Tech's football stadium during home games. There are seven home games scheduled for the upcoming season. She must pay the Tech athletic department a vendor's fee of $3,000 for the season. Her stand and other equipment will cost her $4,500 for the season. She estimates that each hot dog she sells will cost her $0.35. She has talked to friends at other universities who sell hot dogs at games. Based on their information and the athletic department's forecast that each game will sell out, she anticipates that she will sell approximately 2,000 hot dogs during each game. What price should she charge for a hot dog in order to break even (type number only, two decimals, no text or dollar symbol)?arrow_forwardAnnie Russell, a student at Tech, plans to open a hot dog stand inside Tech’s football stadium during home games. There are seven home games scheduled for the upcoming season. She must pay the Tech athletic department a vendor’s fee of $3,000 for the season. Her stand and other equipment will cost her $4,500 for the season. She estimates that each hot dog she sells will cost her $0.35. She has talked to friends at other universities who sell hot dogs at games. Based on their information and the athletic department’s forecast that each game will sell out, she anticipates that she will sell approximately 2,000 hot dogs during each game. What price should she charge for a hot dog in order to break even?arrow_forward
- Kendall purchased an office building in Atlanta's growing west end. The building is 70 years old and has been empty for over ten years. The offices are in disrepair. First thing Kendall must do is to hire a painter to paint the interior of the office building. Kendall reaches out to Cameron, and they have the following conversation: Kendall: I will pay you $25,000 to paint the interior of my office building. Cameron: I have seen your office building, it will cost you $75,000 for me to paint that building's interior. Kendall: Ah, yes. Well, let's split it down the middle. I will pay you $50,000.00. Cameron: OK. I agree to do it for $50,000, but you must also supply the paint, brushes, ladders, tarps, cleaner, and other equipment I need. Does a contract exist between Kendall and Cameron?? Explain fully using IRAC.arrow_forwarda) Catherine buys and sells real estate. Two weeks ago, she paid $300,000 for a house on Pine Street, intending to spend $50,000 on repairs and then sell the house for $400,000. Last week, the city government announced a plan to build a new landfill on Pine Street just down the street from the house Catherine purchased. As a result of the city’s announced plan, Catherine is weighing two alternatives: She can go ahead with the $50,000 in repairs and then sell the house for $290,000, or she can forgo the repairs and sell the house as it is for $250,000. What should Catherine do? (b) Consider your decision whether to go skiing for the weekend. Suppose transportation, lift tickets and accommodation for the weekend costs $300. Suppose also that restaurant food for the weekend will cost $75. Finally, suppose you have a weekend job that you will have to miss to go skiing, which pays you $120. Calculate the opportunity cost of going skiing? Do you need any other information about computing the…arrow_forwardJohn Meyers recently graduated from university and has managed to find a job. He is from an eco- nomically weak community and has received help from a local charity supported by the city council. John has decided to donate one month’s salary to the charity. However, as the charity is well funded right now, he has decided to deposit his one month’s salary, £1,800, into an account paying 3.67 percent on the condition that the city cannot collect any money from that account for next 120 years. How much money will the city receive from John’s donation in 120 years’ time? USE EXCEL TO WORK THIS OUT AND SHOW THE FORMULA!arrow_forward
- Dr Peter Mark is a medical doctor. He works for his own medical clinic in Sydney. Overall, Dr Peter has incurred the following costs. Advise him as to whether he can claim deductions on the following expenses. Donation of $400 to the building fund of a local public library Payment of $600 membership fees to the Medical Doctors association. Payment of $2000 for repainting the front of his medical clinic with a new type of higher quality paint to make it more attractive to walk-in patients. Payment of 1200 for a Registered Tax Accountant to manage his tax affairs.arrow_forwardTrent is broke and needs cash immediately to pay off a debt he incurred. He visits the local pawn shop and leaves his grandfather’s watch in exchange for $100.00 cash. This is an example of what type of loan? Multiple Choice Unsecured loan Chattle loan UCC loan Secured loan The Environmental Defense Fund, an environmental watchdog group, files a lawsuit to prevent future open-pit coal mining in West Virginia. This type of lawsuit is known as a Multiple Choice wrongful-damage suit. negligence suit. citizen suit. nuisance suit. All of the following may be used as collateral for a secured transaction except Multiple Choice Future profits of a business A promissory note A patent Seeds and cropsarrow_forwardAmy is trying to decide whether or not it would be beneficial to employ the services of a real estate broker in order to facilitate the sale of her home. She has estimated that the marketing costs and opportunity cost associated with time spent dealing with prospective buyers amounts to $5,000. If Amy were to sell the house on her own for $200,000, but a broker would have been able to negotiate a higher price of $208,556, what commission rate should Amy have been willing to accept from a real estate broker to make her indifferent between selling the house on her own and hiring a real estate broker? 2.4% ● 3.1% 5.0% 6.5%arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College