Rollag Corp

question 93

Multiple Choice

Rollag Corp.has a selling price of $30 and variable costs of $20 per unit.When 14,000 units are sold,profits equaled $45,000.What is the margin of safety?

• A)$420,000
• B)$135,000
• C)$142,500
• D)$75,000

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Definitions:

Recognized Gain

The portion of a capital gain on which taxes must be paid, typically realized when an asset is sold for more than its purchase price.

Adjusted Basis

The original cost of a property plus improvements and minus depreciation or damages, used to calculate capital gains or losses.

Fair Market Value

The price at which a property would sell under normal conditions in an open and competitive market.

Recognized Gain

This is the portion of gain realized from the sale or exchange of an asset that is subject to taxation under the IRS code.