Foundations of Competitive Analysis
Name:_______________________________
FOUNDATIONS OF COMPETITIVE ANALYSIS
HOMEWORK 1
Jenny Ellis, Spring 2013
Due date: Thursday April 11, in class.
Fill in the blanks, and briefly show your work
1. A partial income statement from Webfoot Industries, Inc. is shown below:
Revenues
Revenue from sales of goods and services ................ $27,500,000
Operating costs and expenses:
Cost of products and services sold.............................. $15,000,000
Selling expenses ............................................. ............ $2,235,000
Administrative expenses...................................... ......... $1,765,000
Total operating costs and expenses................. ........ $19,000,000
Income from operations .................................................... $8,500,000
Interest expense (corporate bonds & loans) ................... $475,000
Non-recurring legal expenses .......................................... $285,000
Income taxes ..................................................................... $5,245,000
Net income......................................................................... $2,495,000
In 2012, Webfoot owned and occupied an office building in downtown Portland. The building could have been leased to other businesses for $2,000,000 in lease income for 2012. Webfoot also owned undeveloped land valued at $12,000,000. Owners of Webfoot could earn a 5 percent rate of return on funds invested elsewhere.
a. In 2012, Webfoot’s total explicit costs of using market-supplied resources were $____________________.
b. Webfoot’s total implicit costs of using owner-supplied resources equals $_____________ in 2012.
c. Total economic cost was $_________________________.
d. Webfoot’s accounting profit was $_________________________.
e. Economic profit in 2012 was $_________________________.
f. The Board of Directors believes Webfoot’s owners could have earned 7 percent, rather than 5 percent on funds they could invest
FOUNDATIONS OF COMPETITIVE ANALYSIS
HOMEWORK 1
Jenny Ellis, Spring 2013
Due date: Thursday April 11, in class.
Fill in the blanks, and briefly show your work
1. A partial income statement from Webfoot Industries, Inc. is shown below:
Revenues
Revenue from sales of goods and services ................ $27,500,000
Operating costs and expenses:
Cost of products and services sold.............................. $15,000,000
Selling expenses ............................................. ............ $2,235,000
Administrative expenses...................................... ......... $1,765,000
Total operating costs and expenses................. ........ $19,000,000
Income from operations .................................................... $8,500,000
Interest expense (corporate bonds & loans) ................... $475,000
Non-recurring legal expenses .......................................... $285,000
Income taxes ..................................................................... $5,245,000
Net income......................................................................... $2,495,000
In 2012, Webfoot owned and occupied an office building in downtown Portland. The building could have been leased to other businesses for $2,000,000 in lease income for 2012. Webfoot also owned undeveloped land valued at $12,000,000. Owners of Webfoot could earn a 5 percent rate of return on funds invested elsewhere.
a. In 2012, Webfoot’s total explicit costs of using market-supplied resources were $____________________.
b. Webfoot’s total implicit costs of using owner-supplied resources equals $_____________ in 2012.
c. Total economic cost was $_________________________.
d. Webfoot’s accounting profit was $_________________________.
e. Economic profit in 2012 was $_________________________.
f. The Board of Directors believes Webfoot’s owners could have earned 7 percent, rather than 5 percent on funds they could invest