Question

What is the net cash inflow from operating activities that will be reported on Packard's statement of cash flows for Year 1?

Answer 1

The accounting profit for a firm is calculated by subtracting explicit costs from sales revenue. In this scenario, the firm's sales revenue was $1 million, and the costs were $950,000, leading to an accounting profit of $50,000.

Step-by-step explanation:

Calculation of Accounting Profit

To calculate the accounting profit for a firm, you subtract the explicit costs from the total revenues. In the given scenario, Packard's sales revenue was $1 million last year. The costs incurred included $600,000 for labor, $150,000 for capital, and $200,000 on materials. Subtracting these costs from the sales revenue gives us:

Total Revenues: $1,000,000

Explicit Costs: $600,000 (Labor) + $150,000 (Capital) + $200,000 (Materials) = $950,000

Accounting Profit: $1,000,000 - $950,000 = $50,000

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

Answer 2

The accounting profit for a firm is calculated by subtracting explicit costs from sales revenue. In this scenario, the firm's sales revenue was $1 million, and the costs were $950,000, leading to an accounting profit of $50,000.

Step-by-step explanation:

Calculation of Accounting Profit

To calculate the accounting profit for a firm, you subtract the explicit costs from the total revenues. In the given scenario, Packard's sales revenue was $1 million last year. The costs incurred included $600,000 for labor, $150,000 for capital, and $200,000 on materials. Subtracting these costs from the sales revenue gives us:

Total Revenues: $1,000,000

Explicit Costs: $600,000 (Labor) + $150,000 (Capital) + $200,000 (Materials) = $950,000

Accounting Profit: $1,000,000 - $950,000 = $50,000

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