Answered

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Each year, a bicycle repair shop receives $120,000 in total revenue. Annual costs include $40,000 for labor, $5,000 in parts, and $30,000 in equipment rental. The owner of the bicycle repair shop owns the building and could rent it out for $12,000 per year. She could be making $50,000 per year if she worked as a project manager instead. What is the owner's accounting profit

Sagot :

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Answer:

Accounting profit= $45,000

Explanation:

The accounting profit does not take into account the opportunity cost of making a different decision. Therefore, the opportunity of renting the building and working as a project manager will not be taken into account.

Accounting profit= 120,000 - 40,000 - 5,000 - 30,000

Accounting profit= $45,000

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