Question

Franklin Watches, Incorporated makes watches. Its assembly department started the accounting period with a beginning inventory balance of $24,500. During the accounting period, the department incurred:

a) $144,250
b) $164,250
c) $177,250
d) $203,250

Answer 1

The firm's accounting profit is $50,000.

Step-by-step explanation:

The accounting profit of a firm can be calculated by subtracting all the expenses from the sales revenue. In this case, the firm had a sales revenue of $1 million and spent $600,000 on labor, $150,000 on capital, and $200,000 on materials. To calculate accounting profit, we need to subtract the total expenses from the sales revenue. In this case, a firm had sales revenue of $1 million last year. To find the accounting profit, we subtract the sum of expenses from the sales revenue:

Accounting Profit = Sales Revenue - Expenses
Accounting Profit = $1,000,000 - ($600,000 + $150,000 + $200,000)
Accounting Profit = $1,000,000 - $950,000
Accounting Profit = $50,000

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