From the following information calculate : PV ratio , Break Even point , margin of safety … Total sales 3,60,000 selling price per unit 100 variable cost per unit 50 fixed cost 1,00,000 About the author Mary
Answer: P/V ratio = 0.5 Break Even Point = 3,600 Units margin of safety = 1,600 Units Explanation: P/V ratio = Contribution/Sales Contribution = Sales – Variable Cost Units sold = Rs. 3,60,000/Rs. 100 = 3,600 Units. Variable Cost = 3,600 x Rs. 50 = Rs. 1,80,000 Contribution = Rs.(3,60,000 – 1,80,000) = Rs. 1,80,000 P/V Ratio = 1,80,000/3,60,000 = 0.5 Break Even Point (in Units) = Fixed Cost/Contribution per unit Contribution Per Unit = 1,80,000/3,600=Rs. 50 =1,00,000/50 =2,000 Units Break Even Point (in Rs.) = 2,000 x 100 = Rs. 2,00,000 Margin of Safety (in Units) = Current Sales Units – Break Even Sales Units =3,600 – 2,000 = 1,600 Units. Margin of Safety (in Rs.) = Current Sales – Break Even Sales =Rs. (3,60,000 – 2,00,000) = Rs. 1,60,000 Margin of Safety Ratio = (Current Sales Units – Break Even Sales Units)/Current sales Units =1,600/3,600 = 0.44. Reply
Answer:
P/V ratio = 0.5
Break Even Point = 3,600 Units
margin of safety = 1,600 Units
Explanation:
P/V ratio = Contribution/Sales
Contribution = Sales – Variable Cost
Units sold = Rs. 3,60,000/Rs. 100 = 3,600 Units.
Variable Cost = 3,600 x Rs. 50 = Rs. 1,80,000
Contribution = Rs.(3,60,000 – 1,80,000) = Rs. 1,80,000
P/V Ratio = 1,80,000/3,60,000 = 0.5
Break Even Point (in Units) = Fixed Cost/Contribution per unit
Contribution Per Unit = 1,80,000/3,600=Rs. 50
=1,00,000/50
=2,000 Units
Break Even Point (in Rs.) = 2,000 x 100 = Rs. 2,00,000
Margin of Safety (in Units) = Current Sales Units – Break Even Sales Units
=3,600 – 2,000 = 1,600 Units.
Margin of Safety (in Rs.) = Current Sales – Break Even Sales
=Rs. (3,60,000 – 2,00,000) = Rs. 1,60,000
Margin of Safety Ratio = (Current Sales Units – Break Even Sales Units)/Current sales Units
=1,600/3,600 = 0.44.