Majid Corporation Sells a Product for $120 Per Unit

question 357

Multiple Choice

Majid Corporation sells a product for $120 per unit. The product's current sales are 40,800 units and its break-even sales are 31,350 units. What is the margin of safety in dollars?

• A) $2,890,654
• B) $4,896,000
• C) $3,762,000
• D) $1,134,000

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Definitions:

Tax-exempt Institutional Stockholders

Institutional investors that are exempt from paying taxes on dividends received or gains realized from stock holdings.

High Dividend Policy

A strategy by which companies pay out a significant portion of their profits in the form of dividends to their shareholders.

Percentage

A mathematical concept that represents a fraction of 100, commonly used to quantify the relative size of one quantity as a fraction of another.

Strict Residual Dividend

A dividend policy under which dividends are paid from the residual or leftover equity only after all project capital needs are met, prioritizing investment over dividends.