Nicole Owns a Small Pottery Factory

question 7

Multiple Choice

Nicole owns a small pottery factory. She can make 1 000 pieces of pottery per year and sell them for R100 each. It costs Nicole R20 000 for the raw materials to produce the 1 000 pieces of pottery. She has invested R100 000 in her factory and equipment: R50 000 from her savings and R50 000 borrowed at 10 per cent. (Assume that she could have loaned her money out at 10 per cent, too.) Nicole can work at a competing pottery factory for R40 000 per year. The accounting profit at Nicole's pottery factory is:

• A) R30 000.
• B) R35 000.
• C) R70 000.
• D) R75 000.
• E) R80 000.

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Definitions:

Rubella

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The ability to perceive sounds by detecting vibrations through an organism's ears.