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 net income for December would be:
A. $66,400
B. $43,900
C. $47,400
D. $61,500

Answer 1

The firm's accounting profit is calculated by subtracting total expenses from sales revenue. The firm had sales revenue of $1 million and total expenses of $950,000, resulting in an accounting profit of $50,000.

Step-by-step explanation:

To find the firm's accounting profit, we need to subtract the total expenses from the sales revenue. The total expenses include labor, capital, and materials. Accounting profit is calculated as: Accounting Profit = Sales Revenue - Total Expenses. Substituting the given values, we have: Accounting Profit = $1,000,000 - ($600,000 + $150,000 + $200,000) = $1,000,000 - $950,000 = $50,000.

To calculate the firm's accounting profit, we subtract the total expenses from the sales revenue. The calculation is as follows:

• Sales Revenue: $1,000,000
• Total Expenses (Labor + Capital + Materials): $600,000 (Labor) + $150,000 (Capital) + $200,000 (Materials) = $950,000
• Accounting Profit: Sales Revenue - Total Expenses = $1,000,000 - $950,000 = $50,000

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