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

question 17

Multiple Choice

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?

• A)$100,000
• B)$900,000
• C)$500,000
• D)$(300,000)

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Definitions:

Required Assets

Assets that are necessary for a business or individual to achieve its goals, including tangible and intangible resources.

Long-Term Assets

Assets that will not be converted into cash within one year.

Patents

Legal documents granted by governments giving inventors exclusive rights to their inventions, preventing others from making, using, or selling the invention without permission for a certain period.

Short-Term Assets

Assets that will be converted into cash within one year.