BEP (Rs.) = ______ Divided by P/V Ratio
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What is Profit Volume ratio (P/V ratio)?
What is Profit Volume ratio (P/V ratio)?
A company determines the selling price of its products after calculating of the fixed cost, variable cost involved in productions and sales of the items produced by it. There are three other important workings in the process viz. profit volume ratio, breakeven point and margin of safety. Let us study how the companies examine all these.
Fixed cost: The Company has to meet its overhead expenses, irrespective of the volume of production and the sales. This expense is fixed and does not change proportionately to sales. Therefore, these fixed expenses are called as fixed cost.
Variable Cost: The
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