Question

Please show how to work this question in excel. Thank you!

Campbell Manufacturing Company (CMC) was started when it acquired $80,000 by issuing common stock. During the first year of operations, the company incurred specifically identifiable product costs (materials, labor, and overhead) amounting to $75,000. CMC also incurred $60,000 of engineering design and planning costs. There was a debate regarding how the design and planning costs should be classified. Advocates of Option 1 believe that the costs should be classified as general, selling, and administrative costs. Advocates of Option 2 believe it is more appropriate to classify the design and planning costs as product costs. During the year, CMC made 5,000 units of product and sold 4,000 units at a price of $35 each. All transactions were cash transactions. $20,000 Option 2: Total assets $112,000
a. Prepare a GAAP-based income statement and balance sheet under each of the two options

Answer 1

The firm's accounting profit is $50,000.

Step-by-step explanation:

To calculate the firm's accounting profit, we need to subtract the explicit costs from the total revenue. In this case, the total revenue is $1 million, and the explicit costs include labor ($600,000), capital ($150,000), and materials ($200,000). Accounting profit = Total revenue - Explicit costs = $1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000.