a firm's total revenue from sales of output minus the firm's explicit costs. In other words, it is the total money made from sales of cupcakes minus the cost to make the cupcakes. Accounting profit is in most cases the same as the common understanding of profit

1 Answer

  • The equation that allows us to directly get the profit or in this case also equal to the accounting profit is,
                             Profit = Revenue - Total Cost
    Revenue is the amount of total sales while total cost is the sum of the fixed cost and the variable cost.