Matthew's Fish Fry has a monthly target operating income of $7,200.Variable expenses are 60% of sales and monthly fixed expenses are $1,800.What is the monthly margin of safety in dollars if the business achieves its operating income goal?

Question

Quizplus · Accepted Answer

B)
Monthly fixed expense $1,800
Targeted operating income 7,200
Contribution margin 9,000 divided by
Contribution margin % 40% (1- variable expense of 60%)
Targeted income = 22,500 (11,200 / 40%)
Less Breakeven 4,500 (fixed expense 1,800 / 40% CM)
Margin Safety dollars 18,000

Matthew's Fish Fry Has a Monthly Target Operating Income of $7,200.Variable