Answer:
The correct answer is A.
Explanation:
Giving the following information:
Jane makes 1000 items a day. Each day she spends 8 hours producing those items. If hired elsewhere she could have earned $250 an hour. The item sells for $15 each. Production occurs seven days a week. If the explicit costs total $150,000 per month.
First, we need to calculate her actual profit. Then, we compare it to the hypothetical income in another job.
Actual income= Total revenue - total costs
Total production= 1,000*30= 30,000
Actual income= 30,000*15 - 150,000= $300,000
Now, assuming that the other job is also 7 days a week:
Hypothetical income= 250*8*30= $60,000
It is considerably more profitable her actual profession.
The accounting profit doesn't consider the opportunity cost of the other job.
