Question

Built-tight is preparing its master budget for the quarter ended september 30. budgeted sales and cash payments for product costs for the quarter follow. july august september budgeted sales $ 54,500 $ 70,500 $ 57,500 budgeted cash payments for direct materials 15,260 12,540 12,860 direct labor 3,140 2,460 2,540 factory overhead 19,300 15,900 16,300 sales are 15% cash and 85% on credit. all credit sales are collected in the month following the sale. the june 30 balance sheet includes balances of $15,000 in cash; $44,100 in accounts receivable; and a $4,100 balance in loans payable. a minimum cash balance of $15,000 is required. loans are obtained at the end of any month when a cash shortage occurs. interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. if an excess balance of cash exists, loans are repaid at the end of the month. operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($3,100 per month), and rent ($5,600 per month).

Answer 1

To calculate the firm's accounting profit, subtract the total expenses from the sales revenue. In this case, the accounting profit is $50,000.

Step-by-step explanation:

To calculate the firm's accounting profit, we need to subtract the total expenses from the sales revenue. The formula for accounting profit is:

Accounting Profit = Sales Revenue - Total Expenses

In this case, the sales revenue is $1 million, labor expenses are $600,000, capital expenses are $150,000, and materials expenses are $200,000.

Substituting the values into the formula, we get:

Accounting Profit = $1,000,000 - ($600,000 + $150,000 + $200,000)

Accounting Profit = $1,000,000 - $950,000

Accounting Profit = $50,000