Total Sales of a firm Rs 10 00 000 Total Variable Cost Rs 7 00 000 Total Fixed Cost Rs 2 00 000 10 D...........

Finance( Revenue Account ) Others

Total Sales of a firm: Rs.10,00,000

Total Variable Cost: Rs. 7,00,000/-

Total Fixed Cost: Rs. 2,00,000/-

10% Debt: Rs. 5,00,000/-

Operating, Financial and Combined Leverage will be:

3,2,6

5,2,8

3,6,12

None of the above

Operating leverage: Contribution /EBIT

= Sales – Variable Cost/Sales – Variable Cost – Fixed Cost

=10,00,000 – 7,00,000/10,00,000 – 7,00,000- 2,00,000=3

Financial Leverage= EBIT/EBIT-Interest

= 1,00,000/1,00,000-50,000=2

Combined leverage= Operating leverage x Financial Leverage

=3 x 2= 6

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