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 / sethusangurajan
p/v ratio=contribution/sales*100
=5,00,000/10,00.000*100
=50%
BEP =fixed cost/pv ratio
=3,00,000/50%
=6,00,000
margin of safety=profit/pv ratio
=2,00,000/50%
=4,00,000
| Is This Answer Correct ? | 71 Yes | 6 No |
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