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how to calculate the p/v ratio, break even point and the
margin of safety ratio when following statements are given.
sales(1,00,000 units @ Rs.10/-) 10,00,000
Variable costs 5,00,000
contribution 5,00,000
Fixed costs 3,00,000
Net Profit 2,00,000
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Answer Posted / nawrid
p/v ratio=contribution/sales*100
=500000/1000000*100
=50%(percentage of sales)
BEP in cost=Fixed cost/pv ratio
=300000/50%
=600000
BEP in Quantity=Fixed cost/Contribution per unit
=300000/5
=60000
Margin in Safety =Actual sales-BEP sales
=1000000-600000
=400000
| Is This Answer Correct ? | 28 Yes | 5 No |
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