Answer:
A. $1,510,000
B. -$10,000
Explanation:
a. Calculation to determine Bowen’s Accounting profits
Using this formula
Accounting profits = Total revenue - Explicit cost
Let plug in the formula
Accounting profit = $10 million - $8 million - $40,000 - $400,000 - $50,000
Accounting profit= $1,510,000
Therefore Bowen’s Accounting profits is $1,510,000
b. Calculation to determine Bowen’s Economic profit
Using this formula
Economic profits = Accounting profit - Implicit cost
Let plug in the formula
Economic profits = $1,510,000 - [($11,000,000*0.1) + $30,000 + ($60,000 - $40,000)]
Economic profits =$1,510,000 - [$1,100,000+ $30,000 + $60,000 - $40,000)]
Economic profits =$1,510,000-$1,150,000
Economic profits =-$10,000
Therefore Bowen’s Economic profit is -$10,000
