Exhibit 7-1 Sally owns a small business that she operates in a small building she owns.Given the information in Exhibit 7-1, Sally's accounting profit is
A)$80, 000
B)$50, 000
C)$65, 000
D)$35, 000
E)$24, 000

Question

Exhibit 7-1  Sally owns a small business that she operates in a small building she owns.Given the information in Exhibit 7-1, Sally's accounting profit is
A)$80, 000 
B)$50, 000 
C)$65, 000 
D)$35, 000 
E)$24, 000

Quizplus · Accepted Answer

Sally's accounting profit is calculated as total revenue minus total explicit costs. From Exhibit 7-1, we can see that Sally's total revenue is $100,000 and her total explicit costs are $35,000 (rent, utilities, wages, and supplies). So, her accounting profit is:
$100,000 - $35,000 = $65,000. Therefore, the best choice is C.

Exhibit 7-1 Sally Owns a Small Business That She