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Q.8 From the data given below, find out: (a) P/V ratio; (b) Sales, and (c) Margin of safety Fixed cost : Rs. 2,00,000 Profit : Rs. 1,00,000 B.E. Point : Rs. 4,00,000

Answer» TION:P/V RATIO = Contribution/SALES × 100Contribution = FIXED COST + Profit⇒ 2,00,000 + 1,00,000⇒ 3,00,000Contribution = 3,00,000★ Sales :B.E. Point = Fixed Cost/Contribution × Sales⇒ 4,00,000 = 2,00,000/3,00,000 × Sales⇒ Sales = 12,00,000 /2Sales = 6,00,000★ P/V Ratio = Contribution/Sales × 100⇒ 3,00,000/6,00,000 × 100⇒ 50%P/V Ratio = 50%★Margin of safety :Margin of safety = Profit/ Profit Volume Ratio⇒ 1,00,000/50%⇒ 2,00,000Margin of safety = 2,00,000Therefore,(a) P/V Ratio = 50%(b) Sales = 6,00,000and (c) Margin of safety = 2,00,000


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