Question

What does Candy’s total revenue need to be for her to earn an accounting profit? Explain

Answer 1

Answer: $110,000

Explanation:

Accounting profit refers to the Revenue less the explicit expenses which are the actual expenses of the business.

In this scenario, the explicit costs/ expenses are:

= Rent + Wages + Supplies

= 15,000 + 45,000 + 50,000

= $110,000

With explicit costs of $110,000, Candy needs to make higher than this in revenue so that the revenue can cover these costs and then bring in an accounting profit.