The following is cost information for the Creamy Crisp Donut Company. Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000
Annual revenue from operations = $380,000 Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000
Creamy Crisp's accounting profit is

Question

Quizplus · Accepted Answer

Creamy Crisp Donut Company's accounting profit can be calculated by subtracting all explicit costs which are the actual out-of-pocket expenses paid by the business from the total revenue. So, the accounting profit of Creamy Crisp Donut Company is:
$380,000 (Total Revenue) - $120,000 (Payments to workers) - $22,000 (Annual lease on building) - $8,000 (Utilities) = $230,000
Therefore, the correct answer is C.

The Following Is Cost Information for the Creamy Crisp Donut