Question

Use the following information to answer the next question. Barney decides to quit his job as a corporate accountant, which pays $12,058 a month, and goes into business for himself as a certified public accountant. He runs his business from his converted garage apartment, which he could rent out for $458 a month if he wasn't using it as a home office. He must purchase office supplies worth $98 a month, and his monthly electricity bill has increased by $53 now that he is working out of his home office. After six months of working from home, Barney has earned an average of $18,687 per month What are Barney's average monthly accounting profits?

Answer 1

ANSWER:

Accounting profit = revenue - explicit costs

revenue = $18,687 and explicit costs = purchase of office supplies + electricity bill = $98 + $53 = $151

Accounting profit = $18,687 - $151 = $18,536

so the accounting profit is $18,536