Yellow Company's variable expenses are 40% of sales and have monthly fixed expenses of $15,000.The monthly target operating income is $3,750.What is the monthly margin of safety in dollars if Yellow Company achieves its operating income goal?

Question

Quizplus · Accepted Answer

C)
Fixed expenses 15,000
Target income 3,750
18,500
Contribution margin 60% (Variable expense of 40%)
Target sales 31,250
Fixed expense 15,000
Contribution margin 60%
Breakeven sales 25,000 (15,000 / .60)
Target sales 31,250
- Breakeven sales 25,000
Margin safety 6,250

Yellow Company's Variable Expenses Are 40% of Sales and Have