Concept explainers
A firm had sales revenue of
The Accounting profit of the firm.
Answer to Problem 1SCQ
The Accounting profit of the firm is $50,000.
Explanation of Solution
Given information:
Sales revenue: $1 Million
Costs:
Labor: $600,000
Capital: $150,000
Materials: $200,000
Calculation:
Accounting profit = total revenues minus explicit costs
= $1,000,000 − ($600,000 + $150,000 + $200,000)
=$50,000.
So, The Accounting profit of the firm is $50,000.
Introduction:
Accounting Profit is defined as the amount which is left after deducting all the costs from the revenue earned by the company that is Total Revenue − Explicit Costs.
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