Lintell Inc. earned a total revenue of $9.3 million and incurred an explicit cost of $3.6 million for the financial year 2013-14. The owner of the company could earn an annual salary of $0.5 million if he joined another firm. Lintell Inc.'s accounting profit for 2013-14 was:

Question

Quizplus · Accepted Answer

To find the accounting profit, we need to subtract the explicit costs from the total revenue:

Accounting Profit = Total Revenue - Explicit Costs

Accounting Profit = $9.3 million - $3.6 million

Accounting Profit = $5.7 million

We do not consider the owner's opportunity cost (potential salary of $0.5 million) in calculating accounting profit, as it is not an explicit cost. Therefore, the correct answer is B.