Final answer:
The firm's accounting profit is calculated by subtracting the total expenses from the sales revenue. With a sales revenue of $1 million and total expenses of $950,000, the firm's accounting profit comes to $50,000.
Step-by-step explanation:
Calculating the Firm's Accounting Profit
To calculate a firm's accounting profit, you subtract the total expenses from the total revenues. In this scenario, the firm had sales revenue of $1 million. The expenses were as follows: $600,000 on labor, $150,000 on capital and $200,000 on materials. The total expenses amount to $600,000 + $150,000 + $200,000, which equals $950,000. Subtracting the total expenses from the sales revenue gives the accounting profit:
Sales revenue: $1,000,000
Total expenses: $950,000
Accounting profit = Sales revenue - Total expenses
Accounting profit = $1,000,000 - $950,000
Accounting profit = $50,000
Therefore, the firm's accounting profit is $50,000.