James Company Has a Margin of Safety Percentage of 20

question 55

Multiple Choice

James Company has a margin of safety percentage of 20% based on its actual sales.The break-even point is $200,000 and the variable expenses are 45% of sales.Given this information,the actual profit is:

• A)$27,500
• B)$18,000
• C)$22,500
• D)$22,000

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Definitions:

Cumulative Preferred Stock

Preferred stock that accumulates dividends in case they are not paid in the period they were declared, ensuring those dividends are paid out before any dividends to common shareholders.

Noncontrolling Interest

Equity in a subsidiary not attributable directly or indirectly to the parent company, reflecting the portion of subsidiary earnings not owned by the parent.

Noncontrolling Interest Valuation

The process of determining the value of minority shareholders' equity in a subsidiary that is not wholly owned by the parent company.

Treasury Stock

Shares that were issued and subsequently reacquired by the company, held in the company's treasury, and are not considered when calculating earnings per share or dividends.