Accounting Profit Is ________ and Is Equal to ________

question 88

Multiple Choice

Accounting profit is ________ and is equal to ________.

• A) income paid to capital; r*K*
• B) zero; the real interest rate
• C) equal to two-thirds of national income; r*
• D) the same as economic profit; zero
• E) equal to one-third the labor income; r*L*

---

Definitions:

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product or job, such as lubricants for machines.

Raw Materials

Basic materials and substances used in the production process, which are transformed into finished goods through the manufacturing process.

Manufacturing Overhead

All manufacturing costs that are not directly associated with the production of a product, including indirect labor, materials, and expenses.

Manufacturing Cost

The total cost incurred by a company to produce a specific quantity of a product, including direct materials, direct labor, and manufacturing overhead.