Q3.

PART a. Estimate and interpret the degree of operating, financial, and combined leverage of A Ltd. And B. Ltd. based onthe following data:

	A Ltd. (Rs.)	B Ltd. (Rs.)
Sales	16,00,000	20,00,000
Fixed Costs	5,00,000	10,00,000

Variable expenses are 40% of sales for firm A and 25% for firm B. Interest expenses are 1,60,000 for A Ltd. and 2,00,000 for B Ltd.

PART b. X Ltd. Produces a product which has an annual demand of 48000 units. The product requires a component beta which is produced at Rs.20. For every finished product, one unit of the component is required. The ordering cost is Rs.120 per order and the holding cost is 10% p.a. Execute EOQ Calculation.