Final answer:
The $500,000 figure does not align with the provided information, as the given cost of materials is $200,000. The firm has an accounting profit of $50,000, which is calculated by subtracting total costs from the sales revenue of $1 million. There may be a confusion or typo regarding the $500,000 figure.
Step-by-step explanation:
The calculation of $500,000 cost in materials purchased on credit seems to be based on an error or misunderstanding, as it might be getting confused with a different figure. The provided information states that last year a firm had sales revenue of $1 million and expenditures of $600,000 on labor, $150,000 on capital, and $200,000 on materials. To calculate the firm's accounting profit, you subtract the explicit costs (labor, capital, materials) from the total revenues. So, in this case:
- Total Revenues = $1,000,000
- Explicit costs (Labor + Capital + Materials) = $600,000 + $150,000 + $200,000 = $950,000
Subtracting the total explicit costs from total revenues:
Accounting Profit = Total Revenues - Explicit Costs = $1,000,000 - $950,000 = $50,000.
Therefore, there is no reference to a $500,000 cost in materials in the provided information. The cost of materials given is $200,000.