Question

If P/V ratio is 40% of a product is 0.6 and profit is ` 9,000. The margin of safety is

Answer 1

Answer:

Profit Volume ratio is proportion of contribution to sales which signifies the percentage of contribution before considering the fixed cost.

P/V Ratio= Contribution/sales*100

Margin of safety is define as the sales over the break even sales.

Margin of Safety Ratio= Margin of Safety/Actual Sales*100

Profit ratio =Margin of Safety Ratio*P/V Ratio

=50%*20%

=10%.

Explanation:

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