Question

Calculate Crane's net sales, cost of goods sold, and gross profit for these sales. Net sales $ ------------------------- Cost of goods sold $ -------------------- Gross profit $-----------------------

Answer 1

The question is about calculating the accounting profit for a firm. The accounting profit is determined by subtracting total explicit costs from total revenues, which in this case is $50,000 ($1,000,000 in sales revenue minus $950,000 in total costs).

Step-by-step explanation:

The subject of this question is the calculation of a firm's accounting profit, which is a concept in business related to financial performance. Accounting profit is computed by subtracting explicit costs from total revenues. Using the provided information, the firm's sales revenue last year was $1 million, while the expenses totaled $950,000 ($600,000 on labor, $150,000 on capital, and $200,000 on materials). Therefore, to calculate the accounting profit, we subtract the explicit costs from the sales revenue, resulting in:

• Total Revenues: $1,000,000
• Explicit Costs: $600,000 (labor) + $150,000 (capital) + $200,000 (materials) = $950,000
• Accounting Profit: $1,000,000 - $950,000 = $50,000

This $50,000 represents the firm's accounting profit.