Arnold Bess, Tailor has a monthly target operating income of $5,000. Variable expenses are 60% of sales and monthly fixed expenses are $2,000.
Requirements:
1. What is the monthly margin of safety in dollars if the business achieves its operating income goal?
2. What is the monthly margin of safety as a percentage of target sales in dollars?
3. What is Arnold Bess's operating leverage factor at the target level of operating income?

Question

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The Answer of Arnold Bess, Tailor has a monthly target operating income of $5,000. Variable expenses are 60% of sales and monthly fixed expenses are $2,000.
Requirements:
1. What is the monthly margin of safety in dollars if the business achieves its operating income goal?
2. What is the monthly margin of safety as a percentage of target sales in dollars?
3. What is Arnold Bess's operating leverage factor at the target level of operating income?

Arnold Bess, Tailor Has a Monthly Target Operating Income of $5,000