Question

Suppose this information (in millions) is available for the Automotive and Other Operations Divisions of General Motors Corporation for a recent year. General Motors uses the LIFO inventory method.

Beginning inventory $13,921
Ending inventory 14,939
LIFO reserve 1,423
Current assets 60,135
Current liabilities 70,308
Cost of goods sold 166,259
Sales revenue 178,199

Answer 1

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

Step-by-step explanation:

Accounting profit is calculated by subtracting all expenses, including labor, capital, and materials, from the sales revenue. In this case, the firm's accounting profit would be:

Accounting profit = Sales revenue - Labor cost - Capital cost - Materials cost

Substituting the given values:

Accounting profit = $1,000,000 - $600,000 - $150,000 - $200,000 = $50,000