Question

Tanya Company has the following information:

Sales Revenue: $500,000
Cost of Goods Sold: $250,000
Gross Profit: ?
Operating Expenses: $150,000
Net Income: ?

Answer 1

The accounting profit for the firm is $50,000.

Step-by-step explanation:

Accounting profit is calculated by subtracting explicit costs from total revenues. In this case, the firm had sales revenue of $1 million and spent $600,000 on labor, $150,000 on capital, and $200,000 on materials. Therefore, the accounting profit is $1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000.