Compute margin of safety and operating leverage (Learning Objective 5)} Ronnie's Repair Shop has a monthly target
Question:
Compute margin of safety and operating leverage (Learning Objective 5)}
Ronnie's Repair Shop has a monthly target operating income of \(\$ 12,000\). Variable expenses are \(70 \%\) of sales, and monthly fixed expenses are \(\$ 9,000\).
\section*{Requirements}
1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.
2. Express Ronnie's margin of safety as a percentage of target sales.
3. What is Ronnie's operating leverage factor at the target level of operating income?
4. Assume that Ronnie reaches his target. By what percentage will Ronnie's operating income fall if sales volume declines by \(10 \%\) ?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answered By
Shubhradeep Maity
I am an experienced and talented freelance writer passionate about creating high-quality content. I have over five years of experience working in the field and have collaborated with several renowned companies and clients in the SaaS industry.
At Herman LLC, an online collective of writers, I generated 1,000+ views on my content and created journal content for 100+ clients on finance topics. My efforts led to a 60% increase in customer engagement for finance clients through revamping website pages and email interaction.
Previously, at Gerhold, a data management platform using blockchain, I wrote and published over 50 articles on topics such as Business Finance, Scalability, and Financial Security. I managed four writing projects concurrently and increased the average salary per page from $4 to $7 in three months.
In my previous role at Bernier, I created content for 40+ clients within the finance industry, increasing sales by up to 40%.
I am an accomplished writer with a track record of delivering high-quality content on time and within budget. I am dedicated to helping my clients achieve their goals and providing exceptional results.
1+ Reviews
10+ Question Solved
Related Book For 
Question Posted:
