Regina

Repair Shop has a monthly target operating income of

$38,000.

Variable expenses are

60%

of sales and monthly fixed expenses are

$10,500.

Requirements

1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.

2. Express

Regina

Repair Shop's margin of safety as a percentage of target sales.

3. What is

Regina

Repair Shop's operating leverage factor at the target level of operating income?

4. Assume that the repair shop reaches its target. By what percentage will

Regina

Repair Shop's operating income fall if sales volume declines by

13%?

Regina Repair Shop has a monthly target operating income of $38,000. Variable expenses are 60% of sales and monthly fixed expenses are $10,500. Requirements 1. Compute the monthly margin of safely in dollars if the shop achieves its income goal. 2. Express Regina Repair Shop's margin of safety as a percentage of target sales. 3. What is Regina Repair Shop's operating leverage factor at the target level of operating income? 4. Assume that the repair shop reaches its target. By what percentage will Regina Repair Shop's operating income fall if sales volume declines by 13%? FIED 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. = Margin of safety in dollars The margin of safety is S. (Round interim calculations up to the nearest whole dollar and your final answer up to the nearest whole dollar.) Requirement 2. Express Regina Repair Shop's margin of safety as a percentage of target sales. Begin by identifying the formula to compute the margin safety as a percentage of target sales. Margin of safety percentage The margin of safety percentage is% of target sales. (Round your answer to the nearest whole percent.) Requirement 3. What is Regina Repair Shop's operating leverage factor at the target level of operating income? Begin by identifying the formula to compute the operating leverage factor at the target level of operating income. - Operating leverage factor The operating leverage factor is. (Round your answer to two decimal places.) Requirement 4. Assume that the repair shop reaches its target. By what percentage will Regina Repair Shop's operating income fall if sales volume declines by 13%? (Round your answer to two decimal places.) Based upon the operating leverage factor, if volume decreases by 13%, operating income will decrease by %. Time Remaining:00:43:47 Next