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
Answers
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.
Answer:
P/V Ratio= 0.5
Break Even Point= 3,600
Margin of safety= 1.600
Explanation:
- To calculate P/V Ratio we use the formula = Contribution/ Sales
Contribution= Sales- Variable Cost (VC)
Units sold=3,600/ rs. 100= 3,600
VC= 3,600 x rs.50 = rs. 1,80,000
Contribution= rs. (3,60,000 - 1,80,000) = rs. 1,80,000
Therefore P/V ratio = 1.80,000- 3,60,000 = 0.5
- To calculate Break Even Point we use the formula = Fixed Cost/ Contribution per unit
Contribution per unit cost= 1,80,000-3,600=rs.50
1,00,000/50= 2,000 units
Therefore Break Even Point= 2,000 x 100= rs. 2,00,000
- To calculate Margin of Safety we use the formula=
Current Sales Unit - Break Even Sales
= rs. ( 3,60,000-2,00,000)= rs.1,60,000
Margin of Safety =
(Current Sales Unit - Break Even Sales unit) / Current Sales Unit
= 1,600 / 3,600 = 0.44