Question

Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company used the FIFO inventory costing method, but it failed to apply the LC. What is the question?

Answer 1

The firm's accounting profit can be calculated by subtracting the total expenses from the sales revenue.

Step-by-step explanation:

To calculate the firm's accounting profit, we need to subtract the total expenses from the sales revenue. The sales revenue is $1 million, and the total expenses are labor ($600,000), capital ($150,000), and materials ($200,000). Therefore, the accounting profit is calculated as:

Accounting Profit = Sales Revenue - Total Expenses

Accounting Profit = $1,000,000 - ($600,000 + $150,000 + $200,000)

Accounting Profit = $1,000,000 - $950,000

Accounting Profit = $50,000