Accountancy, asked by thekru, 9 months ago

4. 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:
(a) Calculate the P/V Ratio, Break --Even Point and Margin of Safety at this level.
(b) Calculate the effect of 10% increase in the sale price.
(c) Calculate the effect of 10% decrease in the sale price.​

Answers

Answered by manishadabir0608
0

Answer:

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Answered by sonalip1219
3

a. P/V ratio is 50%

BEP is Rs 30,000

Marginal Safety is Rs 30,000

b. P/ V ratio is 54.55%

Break – Even Point  = 27502.75

Margin of Safety =  38497.25

c. P/V ratio is 44.44%

Break – Even Point  = 33753.37

Margin of Safety =  20246.63

Explanation:

a.

Computing the P/V ratio

P/V ratio = Contribution / Sales

where

Contribution = Sales - Variable Cost

= Rs 60,000 - Rs 30,000

Contribution = Rs 30,000

Sales is Rs 60,000

Putting the values above:

P/V ratio = Rs 30,000 / Rs  60,000

P/V ratio = 50%

At break- even point (BEP)

= Sales × P/V ratio

= Rs 60,000 × 50%

= Rs 30,000

At Margin of Safety (M/S)

= Sales × P/V ratio

= Rs 60,000 × 50%

= Rs 30,000

b.

In this case, there is 10% increase in sales. So,

Increase in Sales = Rs 60,000 × 10%

= Rs 6,000

Therefore, New Sales would be Rs 66,000 (Rs 60,000 + Rs 6,000)

Computing Contribution as:

Contribution = Sales - Variable Cost

= Rs 66,000 - Rs 30,000

= Rs 36,000

P/V ratio = Contribution/ Sales

= Rs 36,000 / Rs 66,000

= 54.54%

Break-even point = Fixed cost / P/v ratio

= Rs 15,000 / 54.54 × 100

= 27502.75

Margin of safety = Total sales - Break- even point

= Rs 66000 - 27502.75

= 38497.25

c.

In this case, there is 10% decrease in sales. So,

Decrease in Sales = Rs 60,000 × 10%

= Rs 6,000

Therefore, New Sales would be Rs 54,000 (Rs 60,000 - Rs 6,000)

Computing Contribution as:

Contribution = Sales - Variable Cost

= Rs 54,000 - Rs 30,000

= Rs 24,000

P/V ratio = Contribution/ Sales

= Rs 24,000 / Rs 54,000

= 44.44%

Break-even point = Fixed cost / P/v ratio

= Rs 15,000 / 44.44 × 100

= 33753.37

Margin of safety = Total sales - Break- even point

= Rs 54000 - 33753.37

= 38497.25

=  20246.63

You can learn more from here about P/V ratio:

brainly.in/question/1511738

You can learn more from here about Break even point (BEP):

brainly.in/question/1637465

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