Q 1. A firm had sales revenue of\(1mi... [FREE SOLUTION]

Chapter 7: Q 1. (page 183)

A firm had sales revenue of $$1$ million last year. It spent $$ 600, 000$ on labor, $$150000$ on capital and $$ 200, 000$ on materials. What was the firm鈥檚 accounting profit?

Short Answer

Expert verified

The firm's accounting profit was $$ 50000 .$

Step by step solution

Step 1. Given Information

Last year, a company made $1$ million in sales. It spent $$ 600, 000$ on labor, $$ 150, 000$ on capital and $$ 200, 000$ on materials.

Step 2. Accounting profit

A firm's accounting profit is the difference between its revenue and its explicit costs. Explicit costs include all kinds of out-of-pocket costs: wages to laborers, rents of capital, input costs, etc.

The firm's accounting profit

The firm's revenue is $$ 1$ million

The firm's e explicit costs = $$ 600000 + $ 150000 + $ 200000 = $ 950000$

The firm's accounting profit = $$ 1000000 - $ 950000 = $ 50000 .$

The firm's accounting profit was $$ 50000 .$

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A firm had sales revenue of $\(1$ million last year. It spent $\) 600, 000$ on labor, $\(150000$ on capital and $\) 200, 000$ on materials. What was the firm鈥檚 accounting profit?

Short Answer

Step by step solution

Step 1. Given Information

Step 2. Accounting profit

The firm's accounting profit

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Economics Textbooks

Taxation Economics

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魅影直播

A firm had sales revenue of\(1million last year. It spent\)600,000on labor,\(150000on capital and\)200,000on materials. What was the firm鈥檚 accounting profit?

Short Answer

Step by step solution

Step 1. Given Information

Step 2. Accounting profit

The firm's accounting profit

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Economics Textbooks

Taxation Economics

Study anywhere. Anytime. Across all devices.

A firm had sales revenue of $\(1$ million last year. It spent $\) 600, 000$ on labor, $\(150000$ on capital and $\) 200, 000$ on materials. What was the firm鈥檚 accounting profit?