Final answer:
The firm's accounting profit is calculated by subtracting the total costs of $950,000 from the sales revenue of $1 million, resulting in an accounting profit of $50,000.
Step-by-step explanation:
Calculating the Firm's Accounting Profit:
To calculate the firm's accounting profit, we subtract the total costs from the sales revenue. In this scenario the firm had sales revenue of $1 million last year. The costs incurred by the firm were $600,000 on labor, $150,000 on capital, and $200,000 on materials. Therefore, the accounting profit can be calculated as follows:
- Sales Revenue: $1,000,000
- Total Costs: $600,000 (Labor) + $150,000 (Capital) + $200,000 (Materials) = $950,000
- Accounting Profit: $1,000,000 (Sales Revenue) - $950,000 (Total Costs) = $50,000
The firm's accounting profit is $50,000.
The complete question is: How to calculate the net income.