Final answer:
Without additional information, it's not possible to determine the Year 1 Retained Earnings balance for ABC Company. However, an example calculation shows that a firm with $1 million in total revenues with $950,000 in explicit costs (labor, capital, materials) would have an accounting profit of $50,000.
Step-by-step explanation:
The question asks to calculate the Year 1 Retained Earnings balance before closing for ABC Company, but insufficient data is provided to answer this particular question correctly. However, we can practice a related concept by calculating accounting profit from provided details. Accounting profit is calculated by subtracting explicit costs from total revenues. In the example given:
Total Revenues = $1,000,000
Explicit Costs = Labor ($600,000) + Capital ($150,000) + Materials ($200,000)
Accounting Profit = Total Revenues - Explicit Costs
Accounting Profit = $1,000,000 - ($600,000 + $150,000 + $200,000)
Accounting Profit = $1,000,000 - $950,000
Accounting Profit = $50,000
So, the firm's accounting profit last year was $50,000.