Western Repair Shop has a monthly target operating income of $50,000. Variable expenses are 55% of sales and monthly fixed expenses are $9,600. Requirements 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. 2. Express Western Repair Shop's margin of safety as a percentage of target sales. 3. What is Western Repair Shop's operating leverage factor at the target level of operating income? 4. Assume that the repair shop reaches its target. By what percentage will Western Repair Shop's operating income fall if sales volume declines by 16% Requirement 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. Begin by identifying the formula to compute the margin of safety. Target sales in dollars Break-even sales in dollars = Margin of safety in dollars The margin of safety is $. (Round interim calculations up to the nearest whole dollar and your final answer up to the nearest whole dollar.)
Western Repair Shop has a monthly target operating income of $50,000. Variable expenses are 55% of sales and monthly fixed expenses are $9,600. Requirements 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. 2. Express Western Repair Shop's margin of safety as a percentage of target sales. 3. What is Western Repair Shop's operating leverage factor at the target level of operating income? 4. Assume that the repair shop reaches its target. By what percentage will Western Repair Shop's operating income fall if sales volume declines by 16% Requirement 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. Begin by identifying the formula to compute the margin of safety. Target sales in dollars Break-even sales in dollars = Margin of safety in dollars The margin of safety is $. (Round interim calculations up to the nearest whole dollar and your final answer up to the nearest whole dollar.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Western Repair Shop has a monthly target operating income of $50,000. Variable expenses are 55% of sales and monthly fixed expenses are $9,600.
Requirements
1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.
2. Express Western Repair Shop's margin of safety as a percentage of target sales.
3. What is Western Repair Shop's operating leverage factor at the target level of operating income?
4. Assume that the repair shop reaches its target. By what percentage will Western Repair Shop's operating income fall if sales volume declines by 16%?
Requirement 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.
Begin by identifying the formula to compute the margin of safety.
Target sales in dollars
Margin of safety in dollars
The margin of safety is $. (Round interim calculations up to the nearest whole dollar and your final answer up to the nearest whole dollar.)
Break-even sales in dollars =](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F92f9c27e-8a65-473f-9e90-e5d207bdfdd1%2F6b2a0757-a36b-401f-a41f-8aefc89a0c3a%2Fszjf4s4_processed.png&w=3840&q=75)
Transcribed Image Text:Western Repair Shop has a monthly target operating income of $50,000. Variable expenses are 55% of sales and monthly fixed expenses are $9,600.
Requirements
1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.
2. Express Western Repair Shop's margin of safety as a percentage of target sales.
3. What is Western Repair Shop's operating leverage factor at the target level of operating income?
4. Assume that the repair shop reaches its target. By what percentage will Western Repair Shop's operating income fall if sales volume declines by 16%?
Requirement 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.
Begin by identifying the formula to compute the margin of safety.
Target sales in dollars
Margin of safety in dollars
The margin of safety is $. (Round interim calculations up to the nearest whole dollar and your final answer up to the nearest whole dollar.)
Break-even sales in dollars =
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education