Reggie'sReggie's Repair Shop has a monthly target profit of $15,000. Variable costs are 75% of sales, and monthly fixed costs are $10,000. Requirements 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. 2. Express Reggie's margin of safety as a percentage of target sales.
Reggie'sReggie's Repair Shop has a monthly target profit of $15,000. Variable costs are 75% of sales, and monthly fixed costs are $10,000. Requirements 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. 2. Express Reggie's margin of safety as a percentage of target sales.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Reggie'sReggie's
Repair Shop has a monthly target profit of
$15,000. Variable costs are 75% of sales, and monthly fixed costs are $10,000.
Requirements
1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.
2. Express Reggie's margin of safety as a percentage of target sales.
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