Question

Peach's Peanut Butter Company sells 5,000 jars of peanut butter at a price of $5 per jar. Their explicit cost is $14,000. The owner's capital would earn $1,000 if invested elsewhere and the owner would earn $10,000 working somewhere else. Calculate each of the following. Show your work. a. Total revenue. b. Implicit cost. c. Accounting profit. d. Economic profit.

Answer 1

The presented statement states that the overall revenue was $25,000, the main costs was $3,000, the profit was $11,000, and the profitability was $8,000.

What does the term "company" mean?

A group of individuals can form a legal entity called a corporation to carry out again and control a business activity, whether it's corporate or industrial. A company may be set up in a number of ways for tax and financial responsibility purposes, according to this country's corporate laws.

Briefing:

Quantity sold = $5,000

Price = $5

Explicit cost = $14,000

Opposite cost = $1000 + $10,000

= $11,000

a). Total revenue = P * Q

= $ 5 * $5000

Therefore total revenue is $25,000

b). Implicit costs = Explicit cost - Opposite costs

= $3000

c). Accounting profit is calculated as Net Income - Explicit Costs.

= $25,000 - $14,000

= $11,000

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