Question

The Polaris Company uses a job-order costing system. Which of the following transactions occurred in October?

1) Purchase of raw materials
2) Payment of employee salaries
3) Sale of finished goods
4) Depreciation of factory equipment

Answer 1

The question revolves around the business concept of job-order costing system used by Polaris Company. It inquires about the transactions in October but does not provide enough information to specify which occurred. For the self-check question, the firm's accounting profit is calculated by subtracting total expenses from sales revenue, resulting in $50,000.

Step-by-step explanation:

The subject of the question is Business, specifically, job-order costing system. To answer the student's query regarding the transactions that occurred in October for the Polaris Company, we look at four different types:

1. Purchase of raw materials
2. Payment of employee salaries
3. Sale of finished goods
4. Depreciation of factory equipment

All these transactions can occur in a company using a job-order costing system, however, the question does not provide enough information to determine which specific transactions took place in October.

Addressing the self-check question:

To calculate the firm's accounting profit, we subtract the total expenses from the sales revenue. The formula is as follows:

Sales Revenue - (Labor Costs + Capital Costs + Material Costs) = Accounting Profit

$1,000,000 - ($600,000 + $150,000 + $200,000) = $1,000,000 - $950,000 = $50,000

Therefore, the firm's accounting profit for last year was $50,000.