Question

Revisiting Dye Co.'s 2012 income statement, what amount of expenses should be classified as general and administrative?

a. $660,000.
b. $765,000.
c. $930,000.
d. $1,290,000

Answer 1

Dye Co.'s accounting profit is calculated by subtracting the total expenses of $950,000 from the sales revenue of $1 million, resulting in an accounting profit of $50,000 for the year. So, the correct answer is C.

Step-by-step explanation:

To calculate the accounting profit of Dye Co., we need to subtract the total expenses from the sales revenue. Given that the firm had sales revenue of $1 million last year and spent $600,000 on labor, $150,000 on capital, and $200,000 on materials, the total expenses are the sum of these costs. Thus, the total expenses would be $600,000 (labor) + $150,000 (capital) + $200,000 (materials) = $950,000.

Subtracting the total expenses from the sales revenue, we get an accounting profit of $1,000,000 - $950,000 = $50,000. So, the accounting profit for Dye Co. for the year is $50,000.