Tax Preparito budgeted revenues for 2015 of $618,000, based on a average of $206 per tax return. The company wants to achieve a margin of safety of 45%. The fixed costs are $327,600, with variable costs of $24 per customer.
1. How do you calculate the margin of safety?
2. If the revenue increased to $224 does it change the margin of safety?
3. Since the number of tax returns is not mentioned; if these increased by 15% how does it affect the margin of safety?