Question

embroidered dog apparel over the Internet. Her annual revenue is​ $128,000 per​ year, the explicit costs of her business are​ $42,000, and the opportunity costs of her business are​ $30,000. What is her accounting​ profit?

Answer 1

$86,000

Step-by-step explanation:

The opportunity cost is an economic concept. It is the cost of the alternative foregone. Accounting profit does not take into cognizance the alternative foregone.

It only considers the explicit cost incurred in the process of making sales or generating revenue.

As such,

Accounting profit = $128,000 - $42,000

= $86,000