A company proposes to introduce a new product in the market. Company wants to maintain P/V ratio at 25%. If variable cost of product is 300 what will be the selling price?
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Answer:
P/V Ratio = contribution ×100 / sales
let the sales is x
25 % = x- 300 ×100/ x
0.25 % = (x - 300 ) / x
0.75%x = 300
x = 300 / 0.75= 400
sales price = 400
and the value of contribution =400- 300 =100
Recheck :--------
P/V Ratio = 100 ×100 /400
= 25%
Explanation:
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