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Specimen Paper Operational Gearing

RRemmy11y ago
Sales 60,000 Cost of Sales 50,000 PBIT 10,000 Interest 4000 PBT 6000 Tax 4500 PAT 1500 60% of COS is variable costs What is the operational gearing?
RRemmy11y ago#1
Contribution/PBIT
John MoffatJohn MoffatTutor11y ago#2
Variable cost = 60% x 50,000 = 30,000 So contribution = 60,000 - 30,000 = 30,000 So contribution/PBIT = 30,000/10,000 = 3.
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