A company maintains a margin of safety of 25% on its current sales and earns a

A company maintains a margin of safety of 25% on its
current sales and earns a profit of Rs. 30 lakhs per annum.
If the company has a profit volume (P/V) ratio of 40%, its
current sales amount to A. Rs. 200 lakhs;
B. Rs. 300 lakhs;
C. Rs. 325 lakhs;
D. None of the above.

Question Posted / aman

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A company maintains a margin of safety of 25% on its current sales and earns a profit of Rs. 30 la..

Answer / lakshman001

Margin of Safety = profit/(p/v)ratio
= 30/.40
MOS = 75lacs
25%S = 75lacs
S =75/.25 = 300lacs

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