I own a factory which I could lease for $100,000 per year. Instead I use it for
ID: 1213920 • Letter: I
Question
I own a factory which I could lease for $100,000 per year. Instead I use it for my own business making PlayDo figures. I earn $200,000 per year selling my PlayDo figures ... the PlayDo costs me $1,000 per year. If I were not making PlayDo figures I would be working as a bouncer at the Foothill Cafeteria making $99,000 per year (....it's a tough crowd). Considering only these expenses... My accounting profits as a PlayDo artist are:
I own a factory which I could lease for $100,000 per year. Instead I use it for my own business making PlayDo figures. I earn $200,000 per year selling my PlayDo figures ... the PlayDo costs me $1,000 per year. If I were not making PlayDo figures I would be working as a bouncer at the Foothill Cafeteria making $99,000 per year (....it's a tough crowd). Considering only these expenses...
My accounting profits as a PlayDo artist are:
A. $99,000 B. $100,000 C. $199,000 D. $0Explanation / Answer
Accounting profit = Total revenues – Total cost
= $200,000 - $1,000
= $199,000
Answer: C