Question

$millions) 2015 2014 Sales $31,051...

a) $31,509
b) $11,747
c) $13,142
d) $13,109

Answer 1

The accounting profit of the firm is calculated by deducting total expenses ($950,000) from the sales revenue of $1 million, resulting in an accounting profit of $50,000.

Step-by-step explanation:

The question is addressing a calculation of accounting profit. To determine the accounting profit, we subtract the total expenses from the sales revenue. In the given scenario, the firm had a sales revenue of $1 million. The expenses include $600,000 spent on labor, $150,000 on capital, and $200,000 on materials. The total expenses amount to $950,000 ($600,000 + $150,000 + $200,000). Therefore, the accounting profit would be the sales revenue minus the total expenses, that is, $1 million - $950,000 = $50,000.