Accounting profit is calculated by subtracting explicit costs from total revenues.
Accounting profit is calculated by subtracting explicit costs, such as labor, capital, and materials, 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.
To calculate the accounting profit, subtract the explicit costs from the total revenues: $1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000.