dam's Repair Shop has a monthly target operating income of $$30,000.$ Variable expenses are $40\%$ of sales, and monthly fixed expenses are $$7,500.$ Hint: The contribution margin ratio $=100\%-$ Variable xpenses percentage of sales.

Read the requirements.

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 dollars

Breakeven sales in dollars

$=$ Margin of safety in dollars

$($Round intermediate calculations up to the nearest whole dollar and your final answer to the nearest whole dollar.$)$

The margin of safety is

Requirement $2.$ Express Adam's margin of safety as a percentage of target sales.

Begin by identifying the formula to compute the margin of safety as a percentage of target sales.

Margin of safety in dollars $$ Target sales in dollars $=$ Margin of safety$-$ percentage

$($Round the percentage to the nearest whole percent.$)$

The margin of safety percentage is $\%$ of target sales.