Billy Bob runs a seafood restaurant. Last year, he earned $70000 in revenue. He had explicit costs of $15000. Billy Bob could have made $30,000 working for the county, and he could have received an additional $20,000 if he had rented out his building and equipment. Calculate Billy Bob's accounting profit.

Question

Allison

Business

28 July, 15:36

Billy Bob runs a seafood restaurant. Last year, he earned $70000 in revenue. He had explicit costs of $15000. Billy Bob could have made $30,000 working for the county, and he could have received an additional $20,000 if he had rented out his building and equipment. Calculate Billy Bob's accounting profit.

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Answers (1)

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Brodie Good · Answer 1

Accounting profit = $55,000

Explanation:

Giving the following information:

Last year, he earned $70000 in revenue. He had explicit costs of $15000.

The accounting profit doesn't take into account the opportunity cost of other income options.

Accounting profit = 70,000 - 15,000 = $55,000