Barney decided to quit his job as a accountant which pays 10,000 a month and goes into business for himself as a certified public accountant. He run his business from home converted garage apartment, which he could rent out for 300 a month if he wasn't using it as a home office. He must purchase office supplies worth $75 a month, and his monthly electricity bill has increased by &50 now that he is working out of his home office. After six months from working from home, Barney has earned an average of $12,000 per month. What are Barney's average monthly accounting profit?

Question

Carlo

Mathematics

4 August, 19:27

Barney decided to quit his job as a accountant which pays 10,000 a month and goes into business for himself as a certified public accountant. He run his business from home converted garage apartment, which he could rent out for 300 a month if he wasn't using it as a home office. He must purchase office supplies worth $75 a month, and his monthly electricity bill has increased by &50 now that he is working out of his home office. After six months from working from home, Barney has earned an average of $12,000 per month. What are Barney's average monthly accounting profit?

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Maci Sampson · Answer 1

His accounting profit is $11,875

Step-by-step explanation:

In this question, we are asked to calculate the average monthly accounting profit for Barney, who used to be an accountant but has now decided to run his business.

Mathematically, the accounting profit can be calculated by subtracting explicit costs from total revenue.

In terms of mathematical equation;

Accounting profit = Total revenue - Explicit costs

Here, total revenue = $12,000 from the question

Explicit costs refers to the payments made directly to others in the course of running a business. Here, explicit cost = $75+$50 = $125

His accounting profit is thus; 12,000 - 125 = $11,875