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In CVP analysis,contribution represents the unit selling price less the unit variable cost. How does it relate to the concept of operating gearing? Solution: The

In CVP analysis,contribution represents the unit selling price less the unit variable cost. How does it relate to the concept of operating gearing?

Solution:The relationship between contribution and fixed costs is referred to as operating gearing: the higher this ratio, the greater the variation in returns relative to volume.

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  • In your own word, explain operating gearing and its relationship to contribution

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