Fast as Lightning Is an Oil Change Service Drive-Through That

question 198

Essay

Fast as Lightning is an oil change service drive-through that charges each customer $24.00 for an oil and filter change service. Fast as Lightning has found that it costs its business $16.00 per oil and filter change. Monthly fixed costs are $44,000; current sales are 8,000 services.
a. Compute the breakeven sales in units.
b. Compute Fast as Lightning's margin of safety in units and sales dollars.
c. Compute Fast as Lightning's margin of safety as a percentage.
d. Compute Fast as Lightning's operating leverage factor.
e. Compute Fast as Lightning's % of operating income decline if sales fall by 18%.

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Definitions:

Liver

A large, vital organ in vertebrates responsible for detoxification, protein synthesis, and the production of biochemicals necessary for digestion among other functions.

Pylorus

The region of the stomach that connects to the duodenum and acts as a valve to control the flow of partially digested food.

Stomach

A muscular organ in the gastrointestinal tract of vertebrates that uses acids and enzymes to digest food.

Small Intestine

The small intestine is a part of the gastrointestinal tract between the stomach and the large intestine, where most of the end absorption of nutrients occurs.