Question

a business owner makes 50 items a day. He spends 8 hours in producing those items. if hired elsewhere he could have earned $10 an hour. The item sells for $10 each. Production occurs seven days a week. if the explicit costs totla $10,000 a month, the accountinf profit for the month equals

Answer 1

Answer:

The month profit is $2600

Step-by-step explanation:

To calculate the month profit, let's calculate the total sales income in a month then we substract the total cost in the same month.

Total Sales Income per Month:

Assuming that the businessman sells all the production in a month, then, he sold:

$\frac{50 units}{day}*\frac{30 days}{month}*\frac{10dollars}{unit}=\frac{15000dollars}{month}$  

Total Costs per Month:

Total Costs = Costs of production + Explicit cost

For the production costs, let's start knowing that, make 50 units expenses him 8 hours per day, but, if he doesn't do that or contracted it, he could earn $10 per hour, however, considering that he is the producer, that costs him $80 per day equivalent to $2400 per month, as follows:

$Cost of Production=\frac{8hours}{day}*\frac{30days}{month}*\frac{10dollars}{hour}=\frac{2400dollars}{month}$

As we know, the explicit costs in a month are $10000, so, Total Costs are:

Total Cost per month = $2400 + $10000 = $12400

Finally, for the month profit, we have: Profit = Sales Income - Total Costs

Profit per month = $15000 - $12400 = $2600

In other terms, he's earning 17% of his total sales. ($\frac{2600dollars}{15000dollars}*100$)