Carter's Repair Shop has a monthly target operating income of $$50,000.$ Variable expenses are $75\%$ of sales, and

monthly fixed expenses are $$11,000.$ Hint: The contribution margin ratio $=100\%-$ Variable expenses percentage of

sales.

Read the requirements.

Requirements

Compute the monthly margin of safety in dollars if the shop achieves its

income goal.

Express Carter's margin of safety as a percentage of target sales.

What is Carter's operating leverage factor at the target level of

operating income?

Assume that the company reaches its target. By what percentage will

the company's operating income fall if sales volume declines by $7\%?$