Computing margin of safety Robbie’s Repair Shop has a monthly target profit of $31,000. Variable costs are 20% of Sales, and monthly fixed costs are $19,000. Requirements Compute the monthly margin of Safety in dollars if the shop achieves its income goal. Express Robbie’s margin of safety, as a percentage of margin Sales. Why would Robbie’s management want to know the shop’s margin of safety?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Computing margin of safety

Robbie’s Repair Shop has a monthly target profit of $31,000. Variable costs are 20% of Sales, and monthly fixed costs are $19,000.

Requirements

  1. Compute the monthly margin of Safety in dollars if the shop achieves its income goal.
  2. Express Robbie’s margin of safety, as a percentage of margin Sales.
  3. Why would Robbie’s management want to know the shop’s margin of safety?
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