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.Requirements1. 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 dollarsMargin of safety in dollarsThe 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 =

The margin of safety sales represents the difference between current sales and break even sales. The…

Answered: Western Repair Shop has a monthly…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You Break It, We Fix-it Repair Shop has a monthly target profit of $18,900. Variable costs are 62% of sales, and monthly fixed costs are $7,500. (Note: 100% of Sales = Variable Costs + Contribution Margin). (Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. (Fixed Costs (Fixed Costs + + + + Expected sales - Target Profit) Target Profit) 1 1 Contribution Margin per ratio (%) Contribution Margin ratio (%) = = = = Required Sales in Dollars to Break-even Required Sales in Dollars to meet Target Profit Break-even sales = Margin of safety in dollars 2. Express what You Break It, We Fix-it Repair Shop margin of safety is as a percentage of target ales. Margin of safety in dollars/ Expected sales in dollars = Margin of safety ratio (%)
Braile Gear Works sells a single gear for a price of $73.00 per unit. The variable costs of the gear are $41.00 per gear and annual fixed costs are $548,800. Required: a. What is the break-even level of annual sales for Braile Gear Works? b. The cost analyst tells you that, based on the price and cost information of the gear and the marketing department's sales projection for next year, the margin of safety percentage is 30 percent. How many units does marketing expect to sell next year? Note: Do not round intermediate calculations. Break-even level Number of units to be sold parts
Use cvp model to compute the rooms sales necessary to achieve a net income of $156,000 for a single product motel with total fixed cost of $180,000, an average room rat of $50. and a variable cost per room of $20. The motels income tax rate is 35%. prove accuracy
Kelly and Sam Morse have invested $500,000 in K&S Place. Their projected costs and activities are as follows: Variable Cost Monthly Fixed Costs Monthly Covers Served 63% $30,000 10,000 Answer the following questions below. Show your work. 1. If a monthly profit of $5000 must be earned in addition to the fixed costs, what must the average check be? 2. What would you want to compare the result you calculated with so see if it is reasonable to achieve that check?
Solve this problem is solution
Rolf's Golf store sells golf balls for $27 per dozen. The store's overhead expenses are 26% of cost and the owners require a profit of 18% of cost. a. How much does Rolf's Golf store buy the golf balls for? _____per dozen b. What is the price needed to cover all the costs and expenses? c. What is the highest rate of markdown at which the store will still break even? d. What markdown rate would price the golf balls at cost?
Can you help me with CVP Drill #14?
Woodland Wearables produces two models of a smart watch, the Basic and the Flash. The watches have the following characteristics: Basic Flash Selling price per watch $ 450 $ 550 Variable cost per watch $ 370 $ 310 Expected sales (watches) per year 75,000 25,000 The total fixed costs per year for the company are $1,632,000. Required: What is the anticipated level of profits for the expected sales volumes? Assuming that the product mix is the same at the break-even point, compute the break-even point in units. If the product sales mix were to change to nine Basic watches for each Flash watch, what would be the new break-even volume for Woodland Wearables?
You have recently hired an equipment operator for $30.00 per hour. To determine his/her billing rate you simply multiply $30.00 by 1.20 to ensure you get a 20% profit margin. Is this process correct?
A company is planning a new product. Market research information suggests that the product should sell 20,000 units at $35.00/unit. The company seeks to make a margin of 20% on sales. It is estimated that the lifetime costs of the product will be as follows: a. Research and development costs $60,000 b. Manufacturing costs $25/unit c. Decommissioning Costs $40,000 What is the Target Cost per unit? What is the original lifecycle cost per unit?
Your firm sells high-end road and mountain bikes and related accessories. The following information is available to estimate customer lifetime value for a new customer: Average order: $ 510 Frequency of orders: 1.9 /year Average margin: 60 % markup on retail Customer retention rate: 62 % Promotional/communication costs/yr $ 38 Your discount rate: 10 % Customer acquisition cost $ 145 What is the maximum amount your firm can afford to spend to increase customer retention from 62 % to 81 %? Report your answer rounded to the nearest dollar. To answer the question, calculate CLV at the higher retention rate and subtract the CLV at the lower retention rate. The difference will be the maximum amount the company can afford to spend to increase customer retention.
There are two competing alternatives in your textile business. A-type Tufting Machine costs $10,000 and B-Type Tufting Machine costs $35,000. A-type Tufting Machine can result in $11,000 labour savings in the first two years and $10,000 in year three. B-type Tufting Machine can result in $20,000 labour savings in the first two years. Assume MARR=8%. and find the difference between the net present worth of these two alternatives using infinite planning horizon with project repeatability. a) None of the answers are correct O b) Between $19,176 and $20,367 c) Between $29,176 and $30,367 d) Between $17,176 and $18,367 e) Between $23,176 and $24,367 f) Between $25,176 and $26,367

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