Interested to Buy Any Domain ? << Click Here >> for more details...
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.
- 1 Answers
- 3779 Views
- I also Faced
- E-Mail Answers
Answer Posted / 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 View All Answers
Why is marketing research important?
Describe the potential marketing plans you would have to increase sale revenue from existing customers?
are you confident that even if you don't know something you can study it?
what is market status for Miniature Circuit Breaker in INDIA?
Pick anything in this room and try to sell it to me.
What are the issues that arise in direct marketing?
How do you manage your territory and your distributor?
why should we select you?
What is total customer value?
Q. 4 Give a relationship between concept, Hypothesis and Theory. What are the Salient features and classifications?
im doing job as a tele marketing(trainee)..our company is SAP business partener..most of companis using tally ERP..or other ERP solutions..i have to talk with director of d company & convience them to purchase SAP business 1..so plzz tell me main difference in tally ERP & SAP business one.. plzz help me..
Are you uncomfortable making cold calls?
What do you realistically believe to be your earning potential?
What is the best for the company - team work or individual excellence?
How do you evaluate your performance and per day outcome in daily routine?
