Shannon's Towing Service has a monthly target operating income of $15,000. Variable expenses are 70% of sales,
Question:
Requirements
1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.
2. Express Shannon's margin of safety as a percentage of target sales.
3. What is Shannon's operating leverage factor at the target level of operating income?
4. Assume that the company reaches its target. By what percentage will the company's operating income fall if sales volume declines by 8%?
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Req 1 Contribution margin ratio 100 0 7 0 0 3 0 Breakeven sales in dollars Fixed exp...View the full answer
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