Question: Calculate Operating Leverage and Financial Leverage under situations X, Y, and Z and financial plans 1,2, and 3 respectively form the following information relating to

Calculate Operating Leverage and Financial Leverage under situations X, Y, and Z and financial plans 1,2, and 3 respectively form the following information relating to the operation and capital structure of P, Q, and R limited. Also, find out the combinations of operating and financial leverage which give the highest value and the least value.


Installed Capacity(Units)	1200
Actual Production and Sales (Units)	800
Selling Price per unit	15
Variable Cost per unit	10
Fixed Cost
Situation X	1000
Situation Y	2500
Situation Z	5000
Total Capital Required	10,000

Capital Structure

	1	2	3
Equity	50%	75%	25%
Debt	50%	25%	75%
Cost of Debt		12%	15%

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