Question

Accounting records for The Ralston Company show the following for the most recent fiscal year:

Units produced and sold 59,500
Total revenues and costs
Sales revenue$ 369,600
Direct materials costs 95,200
Direct labor costs 47,600
Variable manufacturing overhead 23,800
Fixed manufacturing overhead 61,600
Variable marketing and administrative costs 19,500
Fixed marketing and administrative costs 46,700

Answer 1

The firm's accounting profit is $50,000.

To calculate the firm's accounting profit, we need to subtract the total costs from the total revenues. In this case, the total revenues are $1 million and the total costs are $600,000 for labor, $150,000 for capital, and $200,000 for materials. Thus, the accounting profit can be calculated as follows:

Accounting Profit = Total Revenues - Total Costs

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

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

Accounting Profit = $50,000