Log Co has an operating gearing ratio of 33.33%. Its sales are currently $100m and its operating profit is $20m. Operating gearing is calculated by dividing fixed costs by variable costs. What will its operating profit be if its sales increase by 15%? O $21m O $23m O $27m O $26m
Log Co has an operating gearing ratio of 33.33%. Its sales are currently $100m and its operating profit is $20m. Operating gearing is calculated by dividing fixed costs by variable costs. What will its operating profit be if its sales increase by 15%? O $21m O $23m O $27m O $26m
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Log Co has an operating gearing ratio of 33.33%. Its sales are currently $100m and its operating profit is $20m.
Operating gearing is calculated by dividing fixed costs by variable costs.
What will its operating profit be if its sales increase by 15%?
O $21m
O $23m
O $27m
O $26m
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