Question

Carpon Lumber sells lumber and general building supplies to building contractors in a medium-sized

town in Montana. Data regarding the store's operations follow:The cash balance at the end of December would be:
A. $13,000
B. $52,400
C. $65,400
D. $74,500

Answer 1

The firm's accounting profit is calculated by subtracting the total expenses from sales revenue, which results in an accounting profit of $50,000.

Step-by-step explanation:

To determine the firm's accounting profit, we need to subtract the total expenses from the sales revenue. The sales revenue is $1 million, the expenses for labor are $600,000, for capital are $150,000, and for materials are $200,000. Adding up the expenses ($600,000 + $150,000 + $200,000), we get a total expense of $950,000. Thus, the accounting profit is calculated as:

Sales Revenue - Total Expenses = Accounting Profit

$1,000,000 - $950,000 = $50,000

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