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

question 263

Multiple Choice

Use the information below to answer the following question(s) .
Southwest Electric Co-op has variable expenses of 20% of sales and monthly fixed expenses of $150,000. The monthly target operating income is $50,000.
-What is the monthly margin of safety as a percentage of target sales in dollars at Southwest Electric Co-op?

• A) 175.00%
• B) 25.00%
• C) 33.33%
• D) 80.00%

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Definitions:

Notes Receivable

Claims against others for money, goods, or services evidenced by notes, promises to pay, or receipts.

Bad Debt Expense

An expense recognized by businesses for accounts receivable that are not expected to be collected.

Credit Basis

The terms and conditions under which credit is extended by a lender to a borrower, including repayment schedules and interest rates.

Operating Expense

Expenses incurred during the normal operation of a business, excluding costs related to production or direct services.