Question

The following data were extracted from the income statement of Keever Inc.?

Answer 1

The question pertains to the calculation of a firm's accounting profit. Accounting profit is calculated by subtracting the firm's expenses (labor, capital, materials) from its sales revenue. The firm's accounting profit in question is $50,000.

Step-by-step explanation:

The student is asking about calculating a firm's accounting profit, which is a concept relevant to business and finance. To calculate the firm's accounting profit, we need to subtract the total expenses from the sales revenue. Here's a step-by-step breakdown:

1. Sales revenue is the total amount the firm earned from sales, which was $1 million.
2. The firm's expenses include labor costs of $600,000, capital expenditure of $150,000, and materials costs of $200,000.
3. To calculate the accounting profit, we subtract the sum of these expenses from the sales revenue: Accounting profit = Sales revenue - (Labor + Capital + Materials).
4. So, the firm's accounting profit would be $1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000.

Hence, the firm's accounting profit is $50,000.