Final answer:
To calculate the firm's accounting profit, subtract the total explicit costs from the sales revenue. The firm's sales revenue was $1 million, with costs of $600,000 for labor, $150,000 for capital, and $200,000 for materials, resulting in an accounting profit of $50,000.
Step-by-step explanation:
The question pertains to calculating a firm's accounting profit, which is derived by subtracting all explicit costs from the total sales revenue. In this case, the accounting profit would be calculated as follows:
Sales Revenue: $1,000,000
Labor Costs: $600,000
Capital Costs: $150,000
Material Costs: $200,000
To find the accounting profit, we subtract the sum of labor, capital, and material costs from the sales revenue.
Accounting Profit = Sales Revenue - (Labor Costs + Capital Costs + Material Costs)
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 last year was $50,000.