Attempts: 0 Keep the Highest: 0/1 1. Accounting versus economic profit In a give
ID: 1128275 • Letter: A
Question
Attempts: 0 Keep the Highest: 0/1 1. Accounting versus economic profit In a given year, an advertising firm has the following costs: $550,000 in wages and salaries paid to employees; $71,000 in rental payments for office space; and $26,000 for office supplies, advertising, and utilities. In addition, Felix, the owner of the firm, works for the firm full time (and is not paid a salary, since he receives the firm's profits). If he did not work for the advertising firm, Felix could earn $115,000 per year working as an advertising agent for another firm For each possible amount of total revenue, fill in the accounting profit and economic profit of the advertising firm. Total Revenue Accounting Profit Economic Profit 740,000 790,000 840,000 890,000 Grade ht N Save & Continue Continue without saving TimeoutExplanation / Answer
Total Accounting cost = Wages and salaries + Rental payments + Office supplies
= 550,000 + 71,000 + 26,000 = $ 647,000
Total Economic Cost = Accounting cost + Opportunity cost which person sacrifices
= 647,000 + 115,000 = $ 762,000
Total Revenue Accounting Profit Economic Profit 740,000 740,000 - 647,000 = 93,000 740,000 - 762,000 = - 22,000 790,000 790,0000 - 647,000 = 143,000 790,000 - 762,000 = 28,000 840,000 193,000 78,000 890,000 243,000 128,000Related Questions
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