Specimen Paper Operational Gearing

This topic has 2 replies, 2 voices, and was last updated 11 years ago by John Moffat.

Viewing 3 posts - 1 through 3 (of 3 total)

Author

Posts
December 4, 2014 at 9:03 pm #217708
Remmy
Member
- Topics: 3
- Replies: 4
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?
December 4, 2014 at 9:06 pm #217710
Remmy
Member
- Topics: 3
- Replies: 4
Contribution/PBIT
December 5, 2014 at 7:48 am #217808
John Moffat
Keymaster
- Topics: 57
- Replies: 54856
Variable cost = 60% x 50,000 = 30,000
So contribution = 60,000 – 30,000 = 30,000

So contribution/PBIT = 30,000/10,000 = 3.
Author

Posts

Viewing 3 posts - 1 through 3 (of 3 total)

You must be logged in to reply to this topic.