extract of profit/loss statement:
sales ------ 60000
COS ------- 50000
------------------------
PBIT -------- 10000
interest -----4000
-------------------------
PBT -------- 6000
tax ---------- 4500
--------------------------
PAT--------- 1500
what is the operational gearing?
a. 2 times
b. 2.5 times
c. .5 times
d. 3 times
the answer is A and is computed as contribution/PBIT.
but we have not covered this in the syllabus!!!!!!
or am i wrong??
i was doing fc/vc or fc/total costs
:(
Ask the Tutor ACCA FM
mcq - operational gearing
10y ago#1Operational gearing certainly is covered in the free lectures!
There is no standard measure of operational gearing and you just have to use your judgement on the information given and the choice of answers available.
(On the information that you have typed it is not possible to give any answer because there is no breakdown between fixed and variable costs)
i apologize. it says 80% of COS is variable.
very very sorry for this omission
10y ago#3No problem, my answer however remains the same. However it seems as though the examiner does regard contribution/PBIT as being the best measure - this is the first time he has asked for a calculation of operational gearing as an MCQ. The only other time he has asked it, it was in a long-form question and he allowed various ways of measuring it (because there is no standard measure).
thank u sir .. this question is from becker kit
10y ago#5You are welcome :-)
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