Final answer:
The firm's accounting profit is calculated by subtracting the total explicit costs from the sales revenue. With a sales revenue of $1 million and total costs of $950,000 (labor, capital, and materials), the firm's accounting profit amounts to $50,000.
Step-by-step explanation:
The question relates to the calculation of accounting profit for a business, which is a fundamental concept in the field of accounting and finance. To calculate the firm's accounting profit, we must subtract all explicit costs from the total sales revenue. If a firm had sales revenue of $1 million last year, and incurred costs of $600,000 on labor, $150,000 on capital, and $200,000 on materials, then the accounting profit can be found through the following calculation:
Accounting Profit = Sales Revenue - (Labor Costs + Capital Costs + Material Costs)
Accounting Profit = $1,000,000 - ($600,000 + $150,000 + $200,000) = $1,000,000 - $950,000 = $50,000.
Therefore, the firm's accounting profit is $50,000. This figure represents the net income that the firm has earned after deducting all the explicit costs associated with its operations.