Fancy Furniture has variable expenses of 40% of sales and monthly fixed expenses of $240,000.The monthly target operating income is $60,000.What is the monthly margin of safety in dollars if Fancy Furniture achieves its operating income goal?

Question

Quizplus · Accepted Answer

A)
Fixed expenses 240,000
Target income 60,000
300,000
Contribution margin 60% (Variable expense of 40%)
Target sales 500,000
Fixed expense 240,000
Contribution margin 60%
Breakeven sales 400,000(240,000 / .60)
Target sales 500,000
- Breakeven sales 400,000
Margin safety 100,000

Fancy Furniture Has Variable Expenses of 40% of Sales and Monthly