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In: Accounting
Regina Repair Shop has a monthly target operating income of $32,000. Variable expenses are 75% of...
Regina Repair Shop has a monthly target operating income of $32,000. Variable expenses are 75% of sales and monthly fixed expenses are $10,000. Requirements Compute the monthly margin of safety in dollars if the shop achieves its income goal. Express Regina Repair Shop’s margin of safety as a percentage of target sales. What is Regina Repair Shop’s operating leverage factor at the target level of operating income? Assume that the repair shop reaches its target. By what percentage will Regina Repair Shop’s operating income fall if sales volume declines by 10%?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Repair Shop has a monthly target operating income of 34000 . Variable expenses are 80 %...
Repair Shop has a monthly target operating income of 34000 .
Variable expenses are 80 % of sales and monthly fixed expenses are
10300 . Requirements 1. Compute the monthly margin of safety in
dollars if the shop achieves its income goal. 2. Express Repair
Shop's margin of safety as a percentage of target sales. 3. What is
Repair Shop's operating leverage factor at the target level of
operating income? 4. Assume that the repair shop reaches its
target. By...
E7-34A Terry's Towing Service has a monthly target operating income of $30,000. Variable expenses are 40%...
E7-34A Terry's Towing Service has a monthly target operating
income of $30,000. Variable expenses are 40% of sales and monthly
fixed expenses are $7,500
1. Compute the monthly margin of safety in dollars if the shop
achieves its income goal.
2. Express Terry's margin of safety as a percentage of target
sales
3. What is Terry's operating leverage factor at the target level
of operating income? 4. Assume that the company reaches its target.
By what percentage will the company's...
Chapter 11 Assignment IT’S ALL GREEK TO HER When Regina McDermott opened her auto repair shop,...
Chapter 11 Assignment
IT’S ALL GREEK TO HER
When Regina McDermott opened her auto repair shop, she thought
her 15 years of experience with cars was all she would need. To a
degree, she was right—within six months, her shop had more work
than it could handle, thanks to her widening reputation. At the
same time, however, Regina has found it necessary to spend more and
more time dealing with financial planning.
Three weeks ago, her accountant came by to...
IT’S ALL GREEK TO HER When Regina McDermott opened her auto repair shop, she thought her...
IT’S ALL GREEK TO HER
When Regina McDermott opened her auto repair shop, she thought
her 15 years of experience with cars was all she would need. To a
degree, she was right—within six months, her shop had more work
than it could handle, thanks to her widening reputation. At the
same time, however, Regina has found it necessary to spend more and
more time dealing with financial planning.
Three weeks ago, her accountant came by to discuss a number...
Chapter 11 Assignment IT’S ALL GREEK TO HER When Regina McDermott opened her auto repair shop,...
Chapter 11 Assignment
IT’S ALL GREEK TO HER
When Regina McDermott opened her auto repair shop, she thought
her 15 years of experience with cars was all she would need. To a
degree, she was right—within six months, her shop had more work
than it could handle, thanks to her widening reputation. At the
same time, however, Regina has found it necessary to spend more and
more time dealing with financial planning.
Three weeks ago, her accountant came by to...
Chapter 11 Assignment IT’S ALL GREEK TO HER When Regina McDermott opened her auto repair shop,...
Chapter 11 Assignment
IT’S ALL GREEK TO HER
When Regina McDermott opened her auto repair shop, she thought
her 15 years of experience with cars was all she would need. To a
degree, she was right—within six months, her shop had more work
than it could handle, thanks to her widening reputation. At the
same time, however, Regina has found it necessary to spend more and
more time dealing with financial planning.
Three weeks ago, her accountant came by to...
Sales (4,000 units) $200,000 Variable expenses 110,000 Contribution margin 90,000 Fixed expenses 48,000 Net operating income...
Sales (4,000 units)
$200,000
Variable
expenses
110,000
Contribution margin
90,000
Fixed
expenses
48,000
Net
operating income
$42,000
A)What is the contribution margin per unit?
B)What is the contribution margin ratio?
C)What is the variable expense ratio?
D) If sales increase to 6,050 units, what would be the estimated
net operating income?
E) If the selling price decreases by $4 per unit and the sales
volume increases by 200 units, what would be the estimated net
operating income?
F) If the...
Per Unit . % of sales Selling price . $75 . 100% Variable Expenses ....
Per Unit .
% of sales
Selling price . $75 . 100%
Variable Expenses . $45 . 60%
Contribution Margin . $30 40%
Fixed expenses are $75,000 per month and the company is selling
3,000 units per month.
2. Refer to the original data . Management is considering using
higher quality components that would increase variable cost by $3
per unit. The manager believes that the higher quality product
would increase sales by 15% per month. Should the higher...
The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will...
The owner of a bicycle repair shop forecasts revenues of
$160,000 a year. Variable costs will be $50,000, and rental costs
for the shop are $30,000 a year. Depreciation on the repair tools
will be $10,000.
a. Prepare an income statement for the shop
based on these estimates. The tax rate is 20%.
Dollars in minus dollars out.
Adjusted accounting profits.
Add back depreciation tax shield.
b. Calculate the operating cash flow for the
repair shop using the three methods...
The owner of a bicycle repair shop forecasts revenues of $180,000 a year. Variable costs will...
The owner of a bicycle repair shop forecasts revenues of
$180,000 a year. Variable costs will be $55,000 and rental costs
for the shop are $35000 a year. Depreciation on the repair tools
will be $15000
a. Prepare an income statement for the shop based on these
estimates. The tax rate is 20%
b. Calculate the Operating cash flow for the repair shop using
three methods given below
dollars in minus dollars out
adjusted accounting profits
add back depreciation tax...
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