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AFC: The abbreviation for average fixed cost, which is fixed cost per unit of output, found by dividing total fixed cost by the quantity of output. Average fixed cost is one of three related cost averages. The other two are average variable cost and avarage total cost. Average fixed cost decreases with larger quantities of output. Because fixed cost is FIXED and does not change with the quantity of output, a given cost is spread more thinly per unit as quantity increases. A thousand dollars of fixed cost averages out to $10 per unit if only 100 units are produced. But if 10,000 units are produced, then the average shrinks to a mere 10 cents per unit.
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                           ACCOUNTING PROFIT: The difference between the revenue received by a firm and the explicit accounting cost incurred. This is the profit listed on a firm's balance sheet, appears periodically in the financial sector of the newspaper, and is reported to the Internal Revenue Service for tax purposes. While accounting profit is the "standard" designation of profit used in the business world, economists prefer to use economic profit More often than not, accounting profit differs from economic profit. In some cases, the two have almost no correlation. The reason rests with the difference between accounting cost and economic cost. Some accounting cost is not an opportunity cost and some opportunity cost is does not show up as an accounting cost.The primary difference between accounting profit and economic profit rests with normal profit. Normal profit is the profit a firm (that is, entrepreneurship) could receive in an alternative venture. Much like labor incurs an opportunity cost by producing one good rather than another, entrepreneurship foregoes the profit that could be earned in one activity when it undertakes another. For example, Phoebe Pankovic might be paid $10 an hour to produce Wacky Willy Stuffed Amigos (those cute and cuddly armadillos and tarantulas) to compensate for a $10 wage that could be earned producing Hot Momma Fudge Bananarama Ice Cream Sundaes. In a similar manner, William J. Wackowski, the entrepreneur who organizes the production of Wacky Willy Stuffed Amigos, foregoes profit that could be earned producing another good, such as Hot Momma Fudge Bananarama Ice Cream Sundaes. This foregone profit is an opportunity cost of entrepreneurship and is deducted from revenue to calculate economic profit. However, it is NOT deducted from revenue to calculate accounting profit.
Recommended Citation:ACCOUNTING PROFIT, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2026. [Accessed: June 7, 2026].
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Today, you are likely to spend a great deal of time wandering around the downtown area seeking to buy either a how-to book on surfing the Internet or a computer that can play music and burn CDs. Be on the lookout for telephone calls from former employers.
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Potato chips were invented in 1853 by a irritated chef repeatedly seeking to appease the hard to please Cornelius Vanderbilt who demanded french fried potatoes that were thinner and crisper than normal.
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"There is at least one point in the history of any company when you have to change dramatically to rise to the next level of performance. Miss that moment, and you start to decline. " -- Andy Grove, Intel Corp. chairman
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