Question

Kurt's Interior has annual revenue of $506,000 with costs of $369,400.

a. $136,600
b. $236,600
c. $136,400
d. $236,400

Answer 1

The accounting profit of the firm can be calculated by subtracting the total costs from the sales revenue.

Step-by-step explanation:

To calculate the firm's accounting profit, we need to subtract the total costs from the sales revenue. The total costs include labor, capital, and materials. The accounting profit is calculated as follows:

1. Calculate the total costs by adding up the labor, capital, and materials costs: $600,000 + $150,000 + $200,000 = $950,000.
2. Subtract the total costs from the sales revenue to find the accounting profit: $1,000,000 - $950,000 = $50,000.

Therefore, the firm's accounting profit was $50,000.