If a handicraft artisan works all day but earns low profit, which hidden cost must be included in income analysis?

Correct answer: Value of the artisan’s labour time and skill

Income analysis must include the value of the artisan’s own labour, time and skill, even when no separate wage is paid. If this cost is omitted, the profit will appear higher than the actual profit. The colour of workshop walls is not a production cost. Exam tip: while calculating profit, include material, transport and labour costs, including hidden or unpaid labour.