Question

A company has inventory with a selling price of $451,000. What is the selling price of the inventory?

1) $451,000
2) $450,000
3) $452,000
4) $453,000

Answer 1

The selling price of the company's inventory is $451,000. In addition, the firm's accounting profit, calculated by subtracting the explicit costs from the total revenues, is $50,000.The correct option is 1.

Step-by-step explanation:

Understanding Inventory Selling Price

The selling price of the inventory mentioned in the question is explicitly stated as $451,000. So, the correct answer to the question, "What is the selling price of the inventory?" is option 1) $451,000.

Now, let's address the self-check question about accounting profit. To calculate the accounting profit, we subtract the explicit costs of labor, capital, and materials from the total sales revenue. The calculation would be:

Accounting Profit = Total Revenues - Explicit Costs

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

= $1,000,000 - $950,000

= $50,000

This is the firm's accounting profit.