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 / shashi kumar b.com student
P/v ratio =contribution/sales * 100
=500000/1000000*100
P/v Ratio =50%
BEP=fixed cost/contribution*sales
=300000/500000*1000000
BEP =6000000
Margin of safety = sales-BEP
=1000000-6000000
Margin of safety=5000000
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