Question

For Main Manufacturing Corporation, the revenue test would be satisfied if any of its industry segments had revenue equal to or greater than which of the following?

1) M2,000,000
2) N₂,400,000
3) O₃,000,000
4) 50,000,000

Answer 1

The firm's accounting profit is calculated by subtracting the total expenses from the sales revenue. With a revenue of $1 million and expenses totaling $950,000 on labor, capital, and materials, the firm's accounting profit was $50,000.

Step-by-step explanation:

The question relates to a business context where we need to calculate the accounting profit of a firm. To determine a firm's accounting profit, we must subtract the total expenses from the total sales revenue. In this specific case, the firm had a sales revenue of $1 million last year. The expenses were as follows: $600,000 on labor, $150,000 on capital, and $200,000 on materials. Therefore, the accounting profit can be calculated as follows:

• Total Sales Revenue: $1,000,000
• Total Expenses (Labor + Capital + Materials): $600,000 + $150,000 + $200,000 = $950,000
• Accounting Profit: Total Sales Revenue - Total Expenses = $1,000,000 - $950,000 = $50,000