Final answer:
The student's query focuses on the application of absorption costing for inventory valuation wherein all manufacturing costs are included in the product cost. To calculate the accounting profit, sales revenue is subtracted from the total sum of labor, capital, and material expenses. For the given example, the accounting profit would be $50,000.
Step-by-step explanation:
The question asks for help in understanding the area inventory valuation under absorption costing. Under absorption costing, all manufacturing costs are absorbed by the units produced, which means that the products inventory carries not just direct costs like materials and labor, but also a share of the manufacturing overhead. The Judson Company appears to have a data set that would include direct materials, direct labor, and manufacturing overhead to be absorbed into the value of inventory. Calculating the profit under this system entails subtracting the total manufacturing cost from the sales revenue.
To derive the accounting profit, we simply take the sales revenue and subtract the sum of the costs (labor plus capital plus materials). In terms of the self-check question provided, the firm's accounting profit would be calculated as follows: $1,000,000 (revenue) - ($600,000 (labor) + $150,000 (capital) + $200,000 (materials)) = $50,000.