Question

Rotablade's net income was $600,000 on sales of $24 million for the year. Average assets for the year were $8 million. For the year:

Answer 1

The firm's accounting profit can be calculated by subtracting the total expenses from the sales revenue.

Step-by-step explanation:

To calculate the firm's accounting profit, we need to subtract the total expenses from the sales revenue. The total expenses include labor, capital, and materials costs. Therefore, the accounting profit can be calculated as follows:

Accounting profit = Sales revenue - (Labor + Capital + Materials)

Accounting profit = $1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000