Scenario 13-19
Doreen's Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000.
-Refer to Scenario 13-19. Suppose the owner of the business had an offer to work for another firm for $25,000. The firm's accounting profit for the year was
A)-$26,000.
B)-$23,000.
C)$2,000.
D)$14,000.

Question

Quizplus · Accepted Answer

The firm's accounting profit is equal to total revenue minus total cost. Total revenue is equal to the price per pound multiplied by the number of pounds sold, which is $6 * 7,000 = $42,000. Total cost is equal to variable costs plus fixed costs, which is $28,000 + $12,000 = $40,000. Therefore, the firm's accounting profit is $42,000 - $40,000 = $2,000.

Scenario 13-19 Doreen's Dairy Produces and Sells Swiss Cheese. Last Year, It