Samantha has been working for a law firm and earning an annual salary of $80,000. She decides to open her own practice. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Samantha will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.

Refer to Scenario 13-5. According to Samantha's accountant, which of the following revenue totals will yield her business $50,000 in profits?

a. $55200

b. $105200

c. $185700

d. $132500

e. $130000

Question

Business

Alfred Madden

16 September, 10:42

Samantha has been working for a law firm and earning an annual salary of $80,000. She decides to open her own practice. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Samantha will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.

Refer to Scenario 13-5. According to Samantha's accountant, which of the following revenue totals will yield her business $50,000 in profits?

a. $55200

b. $105200

c. $185700

d. $132500

e. $130000

+5

Answers (1)

Know the Answer?

Natalia Meyers · Answer 1

The correct answer is option b.

Explanation:

Samantha was earning a salary of $80,000 while working for a law firm.

She decides to open her own practice.

Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper.

The total accounting or explicit costs

= $15,000 + $3,000 + $1,000 + $1,200 + $35,000

= $55,200

Accounting profit = Total revenue - Accounting costs

$50,000 = Total revenue - $55,200

Total revenue = $50,000 + $55,200

Total revenue = $105,200