Lumbini Sugar Mills has degree of operating leverage (DOL)… – BBS Fundamentals of Financial Management 2079 Solved

BBS Fundamentals of Financial Management · 2079 · Solved Question with Answer

Lumbini Sugar Mills has degree of operating leverage (DOL) of 2 at its current production and sales level of 10,000 units. The resulting operating income figure is Rs. 1000.

a. If sales are expected to increase by 20 percent from the current 10,000 units sales position, what would be the resulting operating profit figures?

b. At the company's new sales position of 12,000 units, what is the firm's new DOL figure?

Solution

Lumbini Sugar Mills has degree of operating leverage (DOL) of 2 at its current production and sales level of 10,000 units. The resulting operating…

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