Question

The sales volume in value required to earn the target profit, theformula is

Target profit / Contribution per unit
(Fixed cost + Target profit) x P/V ratio
(Fixed cost + Target profit) / Contribution on per unit
(Fixed cost + Target profit) / PV ratio​

Answer 1

Answer:

fixed cost + target profit / Pv ratio

Answer 2

The correct answer is option (d) (Fixed cost + Target profit) / PV ratio​

Explanation:

• The sales volume in value required to earn the target profit, the formula is (Fixed cost + Target profit) / PV ratio​.
• To calculate the Target profit Volume- Multiply the expected number of units to be sold by their expected contribution margin to arrive at the total contribution margin for the period.
• Subtract the total amount of expected fixed cost for the period. The result is the target profit.