Rodneys Repair Shop has a monthly target profit of $ 15,000. Variable costs are 75% of sales,

Question:

Rodney’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 Rodney’s margin of safety as a percentage of target sales.

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Horngrens Financial and Managerial Accounting

ISBN: 978-0133255584

4th Edition

Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura

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Question Posted: Jan 16, 2015 11:09 AM

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Rodneys Repair Shop has a monthly target profit of $ 15,000. Variable costs are 75% of sales,

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Requirement 1 If variable costs are 75 of sales then the contribution margin ratio must be 25 of sal...View the full answer

Horngrens Financial and Managerial Accounting

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