Asked by Camille James on Jul 14, 2024
Verified
Jane makes 1000 items a day.Each day she spends 8 hours producing those items.If hired elsewhere she could have earned $250 an hour.The item sells for $15 each.Production occurs seven days a week.If the explicit costs total $150,000 per month,what is her accounting profit?
A) $300,000
B) $60,000
C) $450,000
D) $240,000
Accounting Profit
The net income for a company after all expenses have been subtracted from total revenue, according to standard accounting practices.
Explicit Costs
Direct, out-of-pocket expenses incurred in the operation of a business or the execution of a transaction.
Production
The process or method of creating goods and services through the combination of labor, materials, and technology.
- Calculate accounting profit using total revenue and explicit costs.
Verified Answer
MJ
Mohammad JawadJul 20, 2024
Final Answer :
A
Explanation :
The accounting profit is calculated by subtracting the explicit costs from the total revenue. Jane makes 1000 items a day, sells each for $15, and works 7 days a week. Monthly revenue = 1000 items/day * $15/item * 30 days (approx. for a month) = $450,000. Explicit costs = $150,000. Therefore, accounting profit = $450,000 - $150,000 = $300,000.
Learning Objectives
- Calculate accounting profit using total revenue and explicit costs.