Final answer:
To find the accounting profit, subtract the total expenses from the sales revenue. In this case, the firm's accounting profit is $50,000 after deducting expenses of $950,000 from a sales revenue of $1 million.
Step-by-step explanation:
Calculating a Firm's Accounting Profit
To calculate a firm's accounting profit, we subtract the total explicit costs from the total sales revenue. For the firm that had sales revenue of $1 million, we would sum up all the expenses including labor, capital, and materials, which are $600,000, $150,000, and $200,000 respectively. Then, we subtract this total expense from the sales revenue to find the accounting profit.
Here's the calculation:
Total Sales Revenue: $1,000,000
Total Expenses: $(600,000 + 150,000 + 200,000)
Total Expenses: $950,000
Accounting Profit: $1,000,000 - $950,000
Accounting Profit: $50,000