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Calculate the operating leverage for gate ltd

    Assignment Instructions

    Assignment ID: FG133134557

    Question – The Income Statement for Gate Ltd as 31st December 2020 is shown below:

     

    Gate Ltd

     

    £

    Sales 

    1,400,000

    Cost of sales 

    -400,000

    Gross profit 

    1,000,000

    Administrative expenses 

    -670,000

    Operating profit 

    330,000

    Interest expense 

    -60,000

    Earnings before tax 

    270,000

    Taxation 

    -54,000

    Earnings after tax 

    216,000

    Assume that Cost of sales is a variable expense while Administrative expenses are a fixed expense. Calculate the Operating leverage for Gate Ltd.

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