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Sir,
The Profit for the year of a company is $15200. What would be the effect on the profit if the contribution drop by 20%?
Answer was required in % .( Typing Entry)
How do I solve this Sir??
The question must give you either the fixed costs or the level of operating gearing. Without more information the question is not possible!
Sir, to put it other way,
The company has an operating gearing of 160%.
What would be the effect on the profit if the contribution drop by 20%?This was the exact question, I actually got this in my past exam, that’s why I forgot about the operating gearing, thanks for reminding!!
How to solve it??
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