FINANCE,CFM

6. High Operating Leverage Fixed Costs = Rs. 60000 Variable Costs = Rs.0.80 per unit Revenues = Rs. 2 per unit BE = Fixed Costs / Contribution per Unit = FC / (Price – VC) = 60000 / (2- 0.8) = 50000 units

7. Low Operating Leverage Fixed Costs = Rs. 12000 Variable Costs = Rs.1.60 per unit Revenues = Rs. 2 per unit BE = Fixed Costs / Contribution per Unit = FC / (Price – VC) = 12000 / (2- 1.6) = 30000 units

8. Volume-cost-profit analysis: Leveraged firm 60000 200000 140000 60000 80000 100000 36000 160000 124000 60000 64000 80000 12000 120000 10800 60000 48000 60000 0 100000 100000 60000 40000 50000 (12000) 80000 92000 60000 32000 40000 (36000) $40000 76000 60000 $16000 20000 $(60000) 0 $60000 $60000 0 0 Operating Income ( Loss) Total Revenue Total Costs Fixed Costs Total Variable Costs Units Sold

9. Volume-cost-profit analysis: Conservative firm 28000 200000 172000 12000 160000 100000 20000 160000 140000 12000 128000 80000 12000 120000 108000 12000 96000 60000 4000 80000 76000 12000 64000 40000 0 60000 60000 12000 48000 30000 (4000) $40000 44000 12000 $32000 20000 (12000) 0 $12000 $12000 0 0 Operat ing Inc ( Loss) Total Revenue Total Costs Fixed Costs Total Variable Costs Units Sold

10. Operating Income or Loss 60000 36000 12000 (12000) (36000) $(60000) Leveraged Firm 28000 20000 12000 4000 (4000) $(12000) Conservative Firm 100000 80000 60000 40000 20000 0 Units