Question

The accounting profit at Nicole's pottery factory is:

• A. Rs. 30000
• B. Rs. 50000
• C. Rs. 8000
• D. Rs. 75000

Answer 1

The correct option is D Rs. 75000

Accounting profit = total revenue - explicit cost

Total revenue= 1000*100= 100000

Explicit cost=20000 for raw materials + 10% interest for borrowing Rs 50000 = 20000 + 5000 = 25000

Accounting profit = 100000 - 25000 = 75000.

Hence, option D is correct.