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An entrepreneur starts a consulting business. In the first year, the business generates $150,000 in total revenue. The direct operational expenses for the year are $40,000 for office rent, $60,000 for employee salaries, and $10,000 for supplies. To start this business, the entrepreneur gave up a previous job that paid an annual salary of $70,000. Based on this information, what is the business's accounting profit for the year?
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Application in Bloom's Taxonomy
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Economic Profit vs. Accounting Profit
An entrepreneur starts a consulting business. In the first year, the business generates $150,000 in total revenue. The direct operational expenses for the year are $40,000 for office rent, $60,000 for employee salaries, and $10,000 for supplies. To start this business, the entrepreneur gave up a previous job that paid an annual salary of $70,000. Based on this information, what is the business's accounting profit for the year?
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A business owner wants to calculate their firm's accounting profit for the last quarter. Arrange the following steps into the correct logical sequence they should follow.
A small manufacturing company is assessing its performance for the past year. The owner has compiled the following financial data:
- Total revenue from sales: $200,000
- Wages paid to employees: $50,000
- Cost of raw materials: $30,000
- Annual rent for the factory: $24,000
- Interest the owner could have earned by investing their capital elsewhere: $10,000
- Salary the owner could have earned working for another company: $60,000
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