Question

IF TOTAL SALES IS RS 400000AND P/V RATIO IS 20% THEN CONTRIBUTION IS?​

Answer 1

Answer:

The Profit/volume ratio, which is also called the ‘contribution ratio’ or ‘marginal ratio’, expresses the relation of contribution to sales and can be expressed as under:

P/V Ratio = Contribution/Sales

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Since Contribution = Sales – Variable Cost = Fixed Cost + Profit, P/V ratio can also be expressed as:

P/V Ratio = Sales – Variable cost/Sales i.e. S – V/S