The following data are available from the records of a company Sales Rs.60,000

The following data are available from the records of a company
Sales Rs.60,000
Variable cost Rs.30,000
Fixed Cost RS.15,000
You are required to
i) Calculate the P/V Ratio, Break-Even Point and Margin of Safety at this level.
ii) Calculate the above with the effect of 10% increase in selling price.
iii) Calculate the above with the effect of 10% decrease in selling price.

Question Posted / kavya sri

1 Answers
3902 Views
I also Faced
E-Mail Answers

The following data are available from the records of a company Sales Rs.60,000 Variable cost Rs.30..

Answer / tirlangi gireesh

To compute the P/V Ratio, Break-Even Point, and Margin of Safety, let's start with the given data:

i) At the current level:
- Sales: Rs. 60,000
- Variable Cost: Rs. 30,000
- Fixed Cost: Rs. 15,000

**1. P/V Ratio:**
P/V Ratio = (Contribution / Sales) * 100

Contribution = Sales - Variable Cost
Contribution = Rs. 60,000 - Rs. 30,000 = Rs. 30,000

P/V Ratio = (30,000 / 60,000) * 100 = 50%

**2. Break-Even Point:**
Break-Even Point (in units) = Fixed Costs / Contribution per unit

Contribution per unit = (Sales per unit - Variable cost per unit)
Contribution per unit = (60,000 / Number of units) - (30,000 / Number of units)

Let's assume the number of units sold is 'x':
Contribution per unit = (60,000 / x) - (30,000 / x) = (60,000 - 30,000) / x = Rs. 30,000 / x

Break-Even Point (in units) = 15,000 / (30,000 / x) = 0.5x units

**3. Margin of Safety:**
Margin of Safety = Actual Sales - Break-Even Sales
Margin of Safety = Rs. 60,000 - (0.5x * Rs. 60,000) = Rs. 60,000 - Rs. 30,000 = Rs. 30,000

ii) With a 10% increase in selling price:
New Sales = Rs. 60,000 + 10% of Rs. 60,000 = Rs. 66,000

Recompute P/V Ratio, Break-Even Point, and Margin of Safety using the new sales figure.

iii) With a 10% decrease in selling price:
New Sales = Rs. 60,000 - 10% of Rs. 60,000 = Rs. 54,000

Recompute P/V Ratio, Break-Even Point, and Margin of Safety using the new sales figure.

Is This Answer Correct ?

1 Yes

0 No

Post New Answer

More Marketing Sales Interview Questions

why you did'nt select in campus placement ?

0 Answers ICICI, Sunil Hitech Engineers,

i m an MBA / B.Tech (ECE) and would like to go for IT or Software or Electronics Industry .Having 2 years of experience in Telecom industry in RF as Sales & Technical Support Engg, what can be the questions that can be asked during interview.

0 Answers Accenture,

can a company deliver stock directly to dealer if company has super stockist in that area

0 Answers

how can i crack the interview with the combination of B.tech and PGDM ?...what are the tips i should followed

0 Answers Kurlon,

7. Give me an example of a time when you have tried to accomplish something, and failed

0 Answers

why you ere changing you job in a short time(10 months).

7 Answers Reliance,

How do you currently track/manage your sales rep call activity?

0 Answers

What are the values and beliefs guided your life so far and how do you see them influencing your future?

1 Answers Exim Bank, KELD,

Have you always met your sales goals?

0 Answers

What are your top three predictions about how integrated, multichannel marketing in your industry will evolve in coming years? Why?

0 Answers Quest,

What are the differences between a product and a service?

0 Answers

what are the mandatory requirement for clear out the GD & personal interview of company

1 Answers HCL,

For more Marketing Sales Interview Questions Click Here