Q2. ABC Ltd. provides the information as shown in table 6.21 regarding the cost, sales, interests and selling prices. Calculate the DFL. Details of ABC Ltd. Output 20,000 units Fixed costs Rs.3,500 Variable cost Rs.0.05 per unit Interest on borrowed funds Nil Selling price per unit 0.20 Hint calculate DFL = )}}
Solution : DFL={ΔEPS/EPS} ÷ {ΔEBIT/EBIT}
Or DFL = EBIT ÷ {EBIT–I–{Dp/(1-T)}}