Question

Sheffield Corp. developed the following information about its inventories in applying the lower-of-cost-or-net-realizable value (LCNRV) basis in valuing inventories: After Sheffield Corp. applies the LCNRV basis, the inventory items have a cost of $50,000, a net realizable value of $48,000, and a replacement cost of $47,000. They have normal profit margins of $10,000.

Answer 1

The subject of this question is Accounting, and it is about calculating accounting profit based on sales revenue and explicit costs.

Step-by-step explanation:

The subject of this question is Accounting. The question pertains to the calculation of accounting profit based on sales revenue and explicit costs.

Accounting profit is calculated by subtracting explicit costs from total revenues. In this case, the firm had sales revenue of $1 million and spent $600,000 on labor, $150,000 on capital, and $200,000 on materials. So, the accounting profit would be $1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000.

Therefore, the firm's accounting profit is $50,000.