Use the Information Below to Answer the Following Question(s)

question 64

Multiple Choice

Use the information below to answer the following question(s) .
Ava's Fruit Cups has a monthly target operating income of $5,425. Variable expenses are 30% of sales and monthly fixed expenses are $9,800.
-What is the monthly margin of safety as a percentage of sales if Ava's Fruit Cups achieves its operating income goal?

• A) 35.6%
• B) 55.4%
• C) 142.8%
• D) 50.9%

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Definitions:

Long Run

A period in economics during which all factors of production and costs are variable, allowing full adjustment to any change in the economic environment.

Break-Even Point

This is the point at which total revenues equal total costs, and the business or project makes neither a profit nor a loss.

Firm's Output

The quantity of goods or services produced by a firm within a given time period.

Short Run

A period in economics where at least one factor of production is fixed and cannot be changed.