(L. OBJ. 4) Computing margin of safety [15 min]
Ronnie’s Repair Shop has a monthly target operating income of $17,000. Variable costs are 80% of sales, and monthly fixed Costs are $12,000.
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.
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