Question

What is the estimated total manufacturing overhead for Laflame Corporation based on the provided data?

a) $273,000
b) $630,000
c) $357,004
d) $357,000

Answer 1

The firm's accounting profit is obtained by subtracting the total expenses from the sales revenue, amounting to $50,000.

Step-by-step explanation:

To calculate the firm's accounting profit, we subtract the total expenses from the sales revenue. The firm's total expenses are the sum of labor costs, capital costs, and material costs. In this case, the expenses add up to $600,000 (labor) + $150,000 (capital) + $200,000 (materials) which is equal to $950,000. Subtracting this from the sales revenue of $1 million leaves us with an accounting profit of $50,000.