Answer:
Improved ratios will enhance investor's confidence and therefore share price.
Access to a wider range of finance because of a better image to creditors.
Long-term profits will improve liquidity and cash flows, which can be used for future investments, dividends, loan payments or retained.
The accounting records of Jamaican Importers, Inc., at January 1, 2021, included the following: Assets: Investment in IBM common shares $ 1,345,000 Less: Fair value adjustment (145,000) $ 1,200,000 No changes occurred during 2021 in the investment portfolio.
Prepare appropriate adjusting entry(s) at December 31, 2021, assuming the fair value of the IBM common shares was:_____.
1, $ 1,175,000
2, $ 1,275,000
3, $ 1,375,00
Answer: See explanation
Explanation:
The appropriate adjusting entry(s) at December 31, 2021, given the fair value of the IBM common shares are represented below:
1. 31, December 2021
Dr Unrealized holding gain or loss - NI $25,000
Cr To Fair value adjustment $25,000
(To record adjustment to fair value)
2. 31, December 2021
Dr Fair value adjustment $75,000
Cr To Unrealized holding gain or loss - NI $75,000
(To record adjustment to fair value)
3. 31, December 2021
Dr Fair value adjustment $175,000
Cr To Unrealized holding gain or loss - NI $175,000
(To record adjustment to fair value)
An income statement under absorption costing includes which of the following: ______________
a. Direct materials
b. Direct labor
c. Variable overhead
d. Fixed overhead
Answer:
a. Direct materials
b. Direct labor
c. Variable overhead
d. Fixed overhead
Explanation:
The absorption costing is the costing in which the income statement should includes all types of production cost i.e. direct material cost, direct labor cost, variable overhead and the fixed overhead
So as per the given statement, all the four types of costing should be involved while preparing the income statement under the absorption costing
Hence, all 4 options should be considered
Cash Dividends King Tut Corporation issued 19,000 shares of common stock, all of the same class; 12,000 shares are outstanding and 7,000 shares are held as treasury stock. On December 1, 2019, King Tut's board of directors declares a cash dividend of $0.50 per share payable on December 15, 2019, to stockholders of record on December 10, 2019. Required: Prepare the appropriate journal entries for the (a) date of declaration, (b) date of record, and (c) date of payment. If no entry is required, choose "No entry required" and leave the amount boxes blank. (a) fill in the blank 2 fill in the blank 4 (b) fill in the blank 6 fill in the blank 8 (c) fill in the blank 10 fill in the blank 12
Answer:
King Tut Corporation
Journal Entries:
December 1, 2019
Debit Cash dividend $2,500
Credit Dividend Payable $2,500
To record the declaration of $0.50 per share payable on December 15, 2019, to stockholders of record on December 10, 2019.
December 10, 2019 No journal entry
December 15, 2019
Debit Dividend Payable $2,500
Credit Cash $2,500
To record the payment of dividends.
Explanation:
a) Data and Calculations:
Issued 19,000 shares of common stock, all of the same class;
12,000 shares are outstanding and
7,000 shares are held as treasury stock.
December 1, 2019, Cash dividend $2,500 Dividend Payable $2,500
$0.50 per share payable on December 15, 2019, to stockholders of record on
December 10, 2019 No journal entry
December 15, 2019, Dividend Payable $2,500 Cash $2,500
The following information relating to a company's overhead costs is available.
Actual total variable overhead$73,000
Actual total fixed overhead$17,000
Budgeted variable overhead rate per machine hour$2.50
Budgeted total fixed overhead$15,000
Budgeted machine hours allowed for actual output 30,000
Based on this information, the total variable overhead variance is:_______.
Answer: $2,000 favorable
Explanation:
Total variable overhead variance = Budgeted variable overhead - Actual total variable overhead
Budgeted variable overhead = Budgeted machine hours allowed for actual output * Budgeted variable overhead rate per machine hour
= 30,000 * 2.50
= $75,000
Total variable overhead variance = 75,000 - 73,000
= $2,000 favorable
Favorable because the actual amount was less than the budgeted one.
The records of the Dodge Corporation show the following results for the most recent year:
Sales (16,000 units) $256,000
Variable expenses $160,000
Net operating income $32,000
Given the provided data, identify the contribution margin.
Answer:
unitary contribution margin= $6
Explanation:
Giving the following information:
Sales (16,000 units) $256,000
Variable expenses $160,000
First, we need to calculate the unitary selling price and unitary variable cost:
Selling price= 256,000 / 16,000= $16
Unitary variable cost= 160,000 / 16,000= $10
Now, the unitary contribution margin:
unitary contribution margin= selling price - unitary variable cost
unitary contribution margin= 16 - 10
unitary contribution margin= $6
Collegiate Publishing Inc. began printing operations on March 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $7,500 of indirect materials and $11,800 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:
Job 301
Direct materials $10,000
Direct labor 8,000
Factory overhead 6,000
Total $24,000
Job 302
Direct materials $20,000
Direct labor 17,000
Factory overhead 12,750
Total $49,750
Job 303
Direct materials $24,000
Direct labor 18,000
Factory overhead â
Job 304
Direct materials $14,000
Direct labor 12,000
Factory overhead â
Required:
Journalize the Jan. 31 summary entries
.
Answer:
Collegiate Publishing Inc.
Journal Entries:
Debit Finished Goods Inventory $73,750
Credit Work in Process:
Job 301 $24,000
Job 302 $49,750
To record the transfer of completed jobs to Finished Goods Inventory.
Debit Work in Process:
Job 303 $24,000
Job 304 $14,000
Credit Raw materials $38,000
To record raw materials used in production.
Debit Work in Process:
Job 303 $18,000
Job 304 $12,000
Credit Payroll $30,000
To record direct labor incurred in production.
Debit Manufacturing Overhead $19,300
Credit Raw materials $7,500
Credit Payroll $11,800
To record manufacturing overhead costs for indirect materials and labor.
Explanation:
a) Data and Calculations:
Indirect materials = $7,500
Indirect labor = $11,800
Job Cost Sheets: Job 301 Job 302 Job 303 Job 304
Direct materials $10,000 $20,000 $24,000 $14,000
Direct labor 8,000 17,000 18,000 12,000
Factory overhead 6,000 12,750
Total $24,000 $49,750
Summary Entries:
Finished Goods Inventory $73,750 Work in Process: Job 301 $24,000 Job 302 $49,750
Work in Process: Job 303 $24,000 Job 304 $14,000 Raw materials $38,000
Work in Process: Job 303 $18,000 Job 304 $12,000 Payroll $30,000
Manufacturing Overhead $19,300 Raw materials $7,500 Payroll $11,800
The Jan. 31 summary journal entries are:
a. Dr Work in process $68,000
($10,000+$20,000+$24,000+$14,000)
Dr Factory Overhead $ 7,500
Cr Materials $75,500
($68,000+$7,500)
(To record material used)
b. Dr Work in process $55,000
($8,000+$17,000 +$18,000+$12,000)
Dr Factory Overhead $11,800
Cr Wages Payable $66,800
($55,000+$11,800)
(To record labor used)
c. Dr Work in process $41,250
($55,000×75%)
Cr Factory Overhead $41,250
(To record overhead applied)
Job 301:( $6,000/$8,000=75%)
Job 302:($12,750/$17,000=75%)
d. Dr Finished Goods $73,750
Cr Work in process $73,750
($24,000+$49,750)
(To record goods completed)
Learn more here:
https://brainly.com/question/15058578
The Can Division of Sheridan Company manufactures and sells tin cans externally for $0.70 per can. Its unit variable costs and unit fixed costs are $0.24 and $0.07, respectively. The Packaging Division wants to purchase 50,000 cans at $0.31 a can. Selling internally will save $0.03 a can. Assuming the Can Division has sufficient capacity, what is the minimum transfer price it should accept?
a) $0.31
b) $0.21
c) $0.24
d) $0.28
Answer:
b) $0.21
Explanation:
Calculation to determine the minimum transfer price it should accept.
Using this formula
Minimum transfer price = Variable cost per unit - saving cost per unit
Let plug in the formula
Minimum transfer price = $0.24 - $.03
Minimum transfer price = $0.21
Therefore the minimum transfer price it should accept is $0.21
A machine costs $5240 and produces benefits of $1000 at the end of each year for eight years. Assume an annual interest rate of 10%. Use engineering economics principals a.) What is the payback period in years
Answer:
5.24 YEARS
Explanation:
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = Amount invested / cash flow
5240 / 1000 = 5.24 YEARS
With the total performance indicators in place at Sears, it can evaluate if a single store improves its employee attitude by 5 percent and therefore predict with confidence that if the revenue growth in the district as a whole is 5 percent, the revenue growth in this particular store would be 5.5 percent. This is an example of the _______ perspective of the balanced scorecard.
A) innovation and learning
B) internal business
C) financial
D) customer
Answer:
C) financial
Explanation:
In Business management, a balance scorecard can be defined as a performance metrics used for measuring and assessing the quality of performance of a company.
The four (4) performance metrics of a balance scorecard includes the following; customer, learning and growth, internal business processes, and financial.
Generally, there exist a strong causal relationship between customer attitudes, employee attitudes, and financial outcomes that are generated by an organization or business firm.
In this scenario, Sears was able to evaluate that if a single store improves its employee attitude by 5% and revenue in the district as a whole grew by 5%; the revenue growth in this particular store would be 5.5%.
Thus, this is an example of the financial perspective of the balanced scorecard because with its total performance indicators, it was able to measure the level of revenue (finance) that would be generated by the store.
In conclusion, the balance scorecard should be used to determine whether or not the operations of a business is in synchronization with its vision statement and values.
Del Monty will receive the following payments at the end of the next three years: $8,000, $11,000, and $13,000. Then from the end of the 4th year through the end of the 10th year, he will receive an annuity of $14,000 per year. At a discount rate of 12 percent, what is the present value of all three future benefits
Answer: $$70,643
Explanation:
The payment from the 4th year to the 10th year is an annuity because it is constant.
The present value of an annuity is:
= Annuity * Present value interest factor of annuity, 12%, 7 years
= 14,000 * 4.5638
= $63,893.20
Present value of these:
= 8,000 / 1.12 + 11,000 / 1.12² + 13,000/1.12³ + 63,893.20 / 1.12³
= $70,643
An asset is purchased on January 1 for $44,700. It is expected to have a useful life of five years after which it will have an expected residual value of $6,000. The company uses the straight-line method. If it is sold for $32,000 exactly two years after it is purchased, the company will record a: Multiple Choice
Answer:
Gain of $2,780
Explanation:
Calculation to determine what The company will record If it is sold for $32,000 exactly two years after it is purchased
First step is to calculate the Annual depreciation expense using this formula
Annual depreciation expense = (Cost − Residual value) × (1 ÷ Useful life)
Let plug in the formula
Annual depreciation expense = ($44,700 − $6,000) × (1 ÷ 5)
Annual depreciation expense =$38,700× (1 ÷ 5)
Annual depreciation expense =$ 7,740
Second step is to calculate the Accumulated depreciation using this formula
Accumulated depreciation = Year 1 depreciation expense + Year 2 depreciation expense
Let plug in the formula
Accumulated depreciation = $7,740 +$7,740
Accumulated depreciation = $15,480
Now let calculate the Gain (loss) on disposal
Using this formula
Gain (loss) on disposal = Proceeds from sale − (Cost − Accumulated Depreciation at time of sale)
Let plug in the formula
Gain (loss) on disposal = $32,000 − ($44,700 − $15,480)
Gain (loss) on disposal =$32,000-$29,220
Gain (loss) on disposal=$2,780
Therefore If it is sold for $32,000 exactly two years after it is purchased, the company will record a GAIN of $2,780
Your father offers you a choice of $120,000 in 11 years or $48,500 today. Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods. a-1. If money is discounted at 11 percent, what is the present value of the $120,000
Answer:
$38,074
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1 to 10 = 0
Cash flow in year 11 = $120,000
I = 11
PV = 38,074
To determine PV using a financial calculator take the following steps:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Given the choice, i would choose $48,500 today.
The difference between domestic and international marketing lies in the different concepts of marketing.
Answer:
The difference between domestic and international marketing lies in the different concepts of marketing. An international marketer must deal with at least two levels of uncontrollable uncertainty. ... The foreign policies of a country have a direct effect on a firm's international marketing success
outline the various challenges that you are likely to face during the implementation of a dam.
Answer:
gybgdgzhdndnxn nxnnxndndnenens
An important assumption that is made when constructing a supply schedule is only price and quantity matter in determining supply. supply is too important to be left to the marketplace. demand has a positive slope. firms always want to sell a certain amount of a product. all other determinants of supply are held constant.
Answer:
only price and quantity matter in determining supply
all other determinants of supply are held constant
Explanation:
At the time of constructing the supply schedule, only price and quantity should be considered and other factors should remain the same because the factors that impacts the supply other than the price so it shifted the supply curve but when only the price changed so there should be the movement also law of supply represent the direct relationship between tfhe price and the supply
A firm is considering a project with annual cash flows of $300,000. The project would have a five-year life, and the company uses a discount rate of 12%. What is the amount at which the firm would be indifferent between accepting or rejecting the investment
Answer:
$1,081,434
Explanation:
At indifference point, the present value of cash outflow equals present value of cash inflow.
Present value of cash inflow = Annual cash inflow * PV annuity factor (12%, 5 years)
Present value of cash inflow = $300,000*3.60478
Present value of cash inflow = $1,081,434
So, the amount at which the firm would be indifferent between accepting or rejecting the investment is $1,081,434.
The Public Company Accounting Oversight Board (PCAOB) has authority to establish which of the following relating to public companies?
Attestation Standards Independence Standards
A. Yes Yes
B. Yes No
C. No Yes
D. No No
a. Option A
b. Option B
c. Option C
d. Option D
Answer: a. Option A
Explanation:
The Public Company Accounting Oversight Board (PCAOB) was formed by the Sarbanes-Oxley Act in the aftermath of the disastrous accounting policies of companies like WorldCom and Enron in the early 2000s to protect investors from such happening again.
The PCAOB monitors companies to ensure that they are complying by the provisions of the Sarbanes-Oxley Act and do so by coming up with both attestation and independence standards that these companies are to adhere to.
Last year Aft charged $1,220,293 Depreciation on the Income Statement of Andrews. If early this year Aft purchased a new depreciable asset, the effect on Andrews's financial statements would be (all other items remaining equal):
Answer: No impact on Net Cash from operations.
Explanation:
There are three main sections in the cash flows statement and these are the operating activities which includes the cash transactions which has an effect on the net income; the investing activites which are the cash transactions that has to do with non-current assets and the financing activities which are the cash transactions that involves the non current liabilities and equity.
It should be noted that the purchase of the long-term assets is an investing activities. Therefore, the item will be recorded in the Investing activities in the cash flow statement.
There will be a reduction in cash while there'll be an increase in the fixed. The income statement is also affected due to the fact that there will be an increase in the depreciation expense that's recorded.
Therefore, there'll be no impact on the net cash from operations.
Tangerine, Inc. provides the following data: Surround, Inc. Comparative Balance Sheet Dec. 31, 20X9 Assets Current Assets: Cash and Cash Equivalents $29,000 Account Receivable, Net 31,000 Merchandise Inventory 53,000 Total Current Assets $113,000 Property, Plant, and Equipment, Net 120,000 Total Assets $233,000 Liabilities Current Liabilities: Accounts Payable $4000 Notes Payable 3000 Total Current Liabilities $7000 Long-term Liabilities 84,000 Total Liabilities $91,000 Stockholders' Equity Common Stock $30,000 Retained Earnings 112,000 Total Stockholders' Equity $142,000 Total Liabilities and Stockholders' Equity $233,000 Calculate the debt to equity ratio.
Answer:
The debt to equity ratio is 0.64.
Explanation:
The debt to equity ratio can be calculated using the following formula:
Debt to equity ratio = Total Liabilities / Stockholders' Equity ……………………. (1)
Where:
Total Liabilities = $91,000
Stockholders' Equity = $142,000
Substitute the relevant data into equation (1), we have:
Debt to equity ratio = $91,000 / $142,000 = 0.64
Therefore, the debt to equity ratio is 0.64.
Suppose that in 2014, currency in circulation was $950 billion, required reserves were $60 billion, and excess reserves were $840 billion. At that time, the value of open market operations by the Federal Reserve was $70 billion. The monetary base was
Answer: $1,850 billion
Explanation:
The following were given in the question:
Currency in circulation = $950 billion
Required reserves = $60 billion
Excess reserves = $840 billion
Open market operations = $70 billion
The monetary base will be the value of all the currency in circulation plus the reserves that is held by the banks and this will be:
= $950billion + $60billion + $840billion
= $1,850 billion
Dawson Electronic Services had revenues of $80,000 and expenses of $50,000 for the year. Its assets at the beginning of the year were $400,000. At the end of the year assets were worth $450,000. Calculate its return on assets.
Answer:
See below
Explanation:
Given the above information
Return on assets = Net income / Average total assets
Net income = $98,000
Average total assets = ($409,000 + $459,000) / 2 = $434,000
= $98,000 / $434,000
= 22.58%
Therefore, return on assets = 22.58%
If you are interested in working for a specific company, what type of job site should you look at for opening?
a. Geographic specific site
b. Industry specific site
C. Company site
d. General job site
Please select the best answer from the choices provided
A
B
0 0 0 0
C
D
Save and Exit
Next
Submit
retum
Answer:
c
Explanation:
if you got to the company site and go under careers, it will show you the jobs with descriptions they have available
Enviro Company issues 10.50%, 10-year bonds with a par value of $430,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 7.50%, which implies a selling price of 127.875. The straight-line method is used to allocate interest expense. 1. Using the implied selling price of 127.875. what are the issuer’s cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What is the amount of bond interest expense recorded on the first interest payment date?
Answer:
1.
549,862.5
2.
$331,637.5
3.
$16,581.87
Explanation:
1.
Cash proceeds = Par Value of the bond x Price ratio to par value
Cash proceeds = $430,000 x 127.875%
Cash proceeds = $549,862.5
2.
Bond Interest expense = Total Coupon payment - Premium on bond
Bond Interest expense = ( $430,000 x 10.50% x 10 ) - ( $549,862.5 - $430,000 )
Bond Interest expense = $451,500 - $119,862.5
Bond Interest expense = $331,637.5
3.
Bond Interest expense = Coupon Payment - Premium on Bond amortization
Bond Interest expense = ( $430,000 x 10.5% x 6/12 ) - ( ( $549,862.5 - $430,000 ) / ( 10 x 2 ) )
Bond Interest expense = $22,575 - $5,993.13
Bond Interest expense = $16,581.87
Kanye Company is evaluating the purchase of a rebuilt spot-welding machine to be used in the manufacture of a new product. The machine will cost $178,000, has an estimated useful life of 7 years, a salvage value of zero, and will increase net annual cash flows by $36,562.
What is its approximate internal rate of return? (Round answer to 0 decimal place, e.g. 13%.)
Internal rate of return
Answer: 10%
Explanation:
You can use Excel to solve for this.
The investment will be in negative as shown below.
Input the increase in net annual cash flows 7 times to represent 7 years.
IRR = 9.9999%
= 10%
Direct labor variances Bellingham Company produces a product that requires 3 standard direct labor hours per unit at a standard hourly rate of $22.00 per hour. 15,000 units used 61,900 hours at an hourly rate of $19.85 per hour. What is the direct labor (a) rate variance, (b) time variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
a. Direct labor rate variance $ Favorable
b. Direct labor time variance $ Unfavorable
c. Direct labor cost variance $ Favorable
Answer:
Results are below.
Explanation:
To calculate the direct labor rate variance, we need to use the following formula:
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (22 - 19.85)*61,900
Direct labor rate variance= $133,085
Now, the direct labor time (efficiency variance):
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (45,000 - 61,900)*22
Direct labor time (efficiency) variance= $371,800 unfavorable
Standard quantity= 15,000*3= 45,000
Finally, the total direct labor cost variance:
Total direct labor cost variance= Direct labor rate variance - Direct labor time (efficiency) variance
Total direct labor cost variance= 133,085 - 371,800
Total direct labor cost variance= $238,715 unfavorable
The Doodad Company purchases a machine for $400,000. The machine has an estimated residual value of $20,000. The company expects the machine to produce two million units. The machine is used to make 400,000 units during the current period. Use the information above to answer the following question. If the units-of-production method is used, the depreciation expense for this period is: A. $80,000. B. $400,000. C. $380,000. D. $76,000.
Answer: $76,000
Explanation:
Depreciation per unit = (Cost - Residual value) / Number of units expected to be produced
= (400,000 - 20,000) / 2,000,000
= $0.19 per unit
40,000 units were used this period so the depreciation is:
= 400,000 * 0.19
= $76,000
Billy Bob Company manufactures fine furniture and grandfather clocks. Billy Bob has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following is an indirect cost, assuming the cost object is the Clock Department?
a) Salary of the clock production supervisor
b) Depreciation on the company's factory building
c) Depreciation on clock-making equipment.
d) All of the answers are correct
Answer:
Billy Bob Company
Indirect Costs are:
d) All of the answers are correct
Explanation:
The indirect costs cannot be directly identified with a single grandfather clock. They are not direct costs but are allocated to the Clock Department. For example, Billy Bob Company incurs these indirect costs for producing grandfather clocks: the Clock Department's supervisor's salary expenses, Depreciation on factory building and clock-making equipment, and other indirect materials and labor.
Sanchez Company's output for the current period was assigned a $400,000 standard direct labor cost. The direct labor variances included a $10,000 unfavorable direct labor rate variance and a $4,000 favorable direct labor efficiency variance. What is the actual total direct labor cost for the current period
Answer:
$406,000
Explanation:
Calculation to determine the actual total direct labor cost for the current period
Using this formula
Actual direct labor cost=Standard direct labor cost + unfavorable rate variance - favorable efficiency variance
Let plug in the formula
Actual direct labor cost=$400,000 + $10,000 - $4,000
Actual direct labor cost= $406,000
Therefore the actual total direct labor cost for the current period is $406,000
On January 1, 2019, Stronger Industries issued $480,000 of 9%, five-year bonds that pay interest semiannually on June 30 and December 31. They are issued at $499,483 and their market rate is 8% at the issue date. After recording the entry for the issuance of the bonds, Bonds Payable had a balance of $480,000 and Premium on Bonds Payable had a balance of $19,483. Stroger uses the effective interest bond amortization method. The first semiannual interest payment was made on June 30, 2019. Complete the necessary journal entry for the interest payment date of June 30, 2019 by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer:
Journal Entry to record the first interest payment
June 30, 2019
Dr. Interst Expense $19,979.32
Dr. Premium on Bond $1,620.68
Cr. Cash $21,600
Explanation:
First, we need to calculate the premium on bond amortization as follow
Premium on bond amortization = Coupon Payment - Interest Expense
Premium on bond amortization = ( $480,000 x 8% x 6/12 ) - ( $499,483 x 8% x 6/12 )
Premium on bond amortization = $21,600 - $19,979.32
Premium on bond amortization = $1,620.68
There are hundreds if not thousands of wineries. Each winery tries to emphasize how their product is superior to others, though they are all close substitutes. Barriers to entry are low in this industry, and profits for new entrants are small. Which industrial model best fits the wine market
Answer: Monopolistic competition
Explanation:
Based on the information given in the question, the industrial model that best fits the wine market is a monopolistic competition.
Monopolistic competition refers to a form of imperfect competition whereby there are many producers that are competing against each other. They sell differentiated products, therefore the products are not perfect substitutes
In a monopolistic competition, the barriers to entry are low in this industry, and profits for new entrants are small. The firms in the industry possess some market power and therefore can charge a price that's higher price than a competitor. It should also be noted that a zero economic profit is earned in the long run.
