Calculate the accounting profit and economic profit for each of the following firms (amounts are in millions of dollars). Which answer is correct?   Apple BP Tesla Sales $40,091 $5,730 $2,750 Wages and salaries $29,052 $4,932 $500 Cost of  equity capital $12,100 $750 $35 Interest on debt $7,585 $275 $5 Cost of materials $6,500 $556 $1,650 Accounting profit       Economic profit         a. Accounting profit  $6,954  $967  $695 Economic profit  -$5,146  $217  $660   b. Accounting profit -$3,046 -$33 $595 Economic profit -$15,146 -$783 $560         c. Accounting profit -$15,146 -$783 $560 Economic profit -$3,046 -$33 $595       d. Accounting profit -$3,046 -$33 $595 Economic profit -$5,146 -$283 $1060         e. Accounting profit -$5,146  $217  $660 Economic profit  $6,954   $967  $695

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter4: Accounting For Retail Operations
Section: Chapter Questions
Problem 4.2MBA: Sales transactions Using transactions listed in P4-2, indicate the effects of each transaction on...
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QUESTION 18

  1. Calculate the accounting profit and economic profit for each of the following firms (amounts are in millions of dollars). Which answer is correct?

     

    Apple

    BP

    Tesla

    Sales

    $40,091

    $5,730

    $2,750

    Wages and salaries

    $29,052

    $4,932

    $500

    Cost of  equity capital

    $12,100

    $750

    $35

    Interest on debt

    $7,585

    $275

    $5

    Cost of materials

    $6,500

    $556

    $1,650

    Accounting profit

     

     

     

    Economic profit

     

     

     

      a.

    Accounting profit

     $6,954

     $967

     $695

    Economic profit

     -$5,146

     $217

     $660

      b.

    Accounting profit

    -$3,046

    -$33

    $595

    Economic profit

    -$15,146

    -$783

    $560

     

     

     

      c.

    Accounting profit

    -$15,146

    -$783

    $560

    Economic profit

    -$3,046

    -$33

    $595

     

     

      d.

    Accounting profit

    -$3,046

    -$33

    $595

    Economic profit

    -$5,146

    -$283

    $1060

     

     

     

      e.

    Accounting profit

    -$5,146

     $217

     $660

    Economic profit

     $6,954

      $967

     $695

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