### Table B: Bookkeeping for DrinkCo | Description | Amount | |--------------------------------------|------------| | **Total Revenues** | $300,000 | | **Salaries Paid to Workers** | $95,000 | | **Input Costs for Food Ingredients** | $23,616 | | **Utilities Bill** | $17,868 | | **Opportunity Cost of Owner's Time** | $71,271 | **Question:** See the above table. What is the economic profit earned by DrinkCo? --- To calculate the economic profit, subtract all costs (including opportunity costs) from the total revenues. The traditional costs included here are salaries, input costs, and utilities, while the opportunity cost refers to the potential earnings the owner foregoes by investing time in DrinkCo rather than elsewhere. --- **Table A: Bookkeeping for FoodCo** | Description | Amount | |---------------------------------------|------------| | **Total Revenues** | $200,000 | | **Salaries Paid to Workers** | $46,000 | | **Input Costs for Food Ingredients** | $22,826 | | **Utilities Bill** | $6,076 | | **Opportunity Cost of Owner's Time** | $48,215 | **Question:** See the above table. What is the **accounting profit** earned by FoodCo? --- To calculate the accounting profit, subtract the explicit costs (Salaries, Input Costs, Utilities) from the Total Revenues. The opportunity cost of the owner's time is not included in accounting profit calculations.
### Table B: Bookkeeping for DrinkCo | Description | Amount | |--------------------------------------|------------| | **Total Revenues** | $300,000 | | **Salaries Paid to Workers** | $95,000 | | **Input Costs for Food Ingredients** | $23,616 | | **Utilities Bill** | $17,868 | | **Opportunity Cost of Owner's Time** | $71,271 | **Question:** See the above table. What is the economic profit earned by DrinkCo? --- To calculate the economic profit, subtract all costs (including opportunity costs) from the total revenues. The traditional costs included here are salaries, input costs, and utilities, while the opportunity cost refers to the potential earnings the owner foregoes by investing time in DrinkCo rather than elsewhere. --- **Table A: Bookkeeping for FoodCo** | Description | Amount | |---------------------------------------|------------| | **Total Revenues** | $200,000 | | **Salaries Paid to Workers** | $46,000 | | **Input Costs for Food Ingredients** | $22,826 | | **Utilities Bill** | $6,076 | | **Opportunity Cost of Owner's Time** | $48,215 | **Question:** See the above table. What is the **accounting profit** earned by FoodCo? --- To calculate the accounting profit, subtract the explicit costs (Salaries, Input Costs, Utilities) from the Total Revenues. The opportunity cost of the owner's time is not included in accounting profit calculations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:### Table B: Bookkeeping for DrinkCo
| Description | Amount |
|--------------------------------------|------------|
| **Total Revenues** | $300,000 |
| **Salaries Paid to Workers** | $95,000 |
| **Input Costs for Food Ingredients** | $23,616 |
| **Utilities Bill** | $17,868 |
| **Opportunity Cost of Owner's Time** | $71,271 |
**Question:**
See the above table. What is the economic profit earned by DrinkCo?
---
To calculate the economic profit, subtract all costs (including opportunity costs) from the total revenues. The traditional costs included here are salaries, input costs, and utilities, while the opportunity cost refers to the potential earnings the owner foregoes by investing time in DrinkCo rather than elsewhere.
Transcribed Image Text:---
**Table A: Bookkeeping for FoodCo**
| Description | Amount |
|---------------------------------------|------------|
| **Total Revenues** | $200,000 |
| **Salaries Paid to Workers** | $46,000 |
| **Input Costs for Food Ingredients** | $22,826 |
| **Utilities Bill** | $6,076 |
| **Opportunity Cost of Owner's Time** | $48,215 |
**Question:**
See the above table. What is the **accounting profit** earned by FoodCo?
---
To calculate the accounting profit, subtract the explicit costs (Salaries, Input Costs, Utilities) from the Total Revenues. The opportunity cost of the owner's time is not included in accounting profit calculations.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education