Final answer:
The accounting profit of a firm with $1 million in sales revenue and expenses totaling $950,000 (sum of labor, capital, and material costs) is $50,000.
Step-by-step explanation:
Calculating Accounting Profit To determine a firm's accounting profit, subtract the total explicit costs from the total revenues. In this example, a firm had sales revenue of $1 million last year.
The costs incurred were as follows: $600,000 on labor, $150,000 on capital, and $200,000 on materials. The sum of these expenses is $600,000 + $150,000 + $200,000 = $950,000. The accounting profit is calculated as the sales revenue minus these explicit costs, which is: $1,000,000 - $950,000 = $50,000.
Therefore, the firm's accounting profit for the year was $50,000.