Rodneys Repair Shop has a monthly target profit of $ 15,000. Variable costs are 75% of sales,
Question:
Rodney’s Repair Shop has a monthly target profit of $ 15,000. Variable costs are 75% of sales, and monthly fixed costs are $ 10,000.
Requirements
1. Compute the monthly margin of safety in dollars if the shop achieves its income goal.
2. Express Rodney’s margin of safety as a percentage of target sales.
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Requirement 1 If variable costs are 75 of sales then the contribution margin ratio must be 25 of sal...View the full answer
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I did Master of Commerce in year 2009 and completed ACCA (Association of Chartered Certified Accountants) in year 2013. I have 10 years of practical experience inclusive of teaching and industry. Currently i am working in a multinational company as finance manager and serving as part time teacher in a university. I have been doing tutoring via many sites. I am very strong at solving numerical / theoretical scenario-based questions.
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Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133255584
4th Edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
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