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ElectroWizard Company produces a popular video game called Destructo, which sells for $65. Last year ElectroWizard sold 100,000 Destructo games, each of which costs $10 to produce. ElectroWizard incurred selling and administrative expenses of $200,000 and a depreciation expense of $100,000. In addition, ElectroWizard has a $1,000,000 loan outstanding at 8%. Their tax rate is 40%. There are 400,000 common shares outstanding.
Prepare an income statement for ElectroWizard in good form (include EPS).
Monopolistic Competition
An arrangement in the marketplace where several businesses trade in goods that are akin but not completely identical, affording them limited market authority.
Economic Profits
Profits calculated by subtracting both explicit and implicit costs from total revenues, beyond just accounting profits.
Average Cost
Average cost is the total cost of production divided by the number of goods produced, indicating the cost per unit of output.
Purely Competitive Firm
A firm that operates in a purely competitive market, characterized by many competitors, homogeneous products, and free market entry and exit.
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