Question

you are given the following data year 2016, 2017 and sales 120000, 140000 and profit 8000, 13000 find out: 1) p/v ratio , 2) break even point, 3) Profit when sales are 180000/- , 4) Margin of safety in year 2017.

Answer 1

Answer:

Solution:SalesProfitYear 2010`1,20,0008,000Year 2011`1,40,00013,000Difference`20,0005,000(i)P/V Ratio =SalesinDifferenceprofitinDifference×100 =20,0005,000×100 = 25 %(`)Contribution in 2010 (1,20,000×25%)30,000Less : Profit8,000Fixed Cost*22,000*Contribution=Fixed cost + Profit∴Fixed cost=Contribution - Profit(ii)Break-even point=ratioP/VcostFixed=25%22,000=`88,000(iii)Profit when sales are`1,80,000(Contribution (`1,80,000×25%)45,000Less: Fixed cost22,000Profit23,000(iv)Sales to earn a profit of`12,000ratioP/VprofitDesiredcostFixed+=25%12,00022,000+=`1,36,000(v)Margin of safety in 2011 –Margin of safety=Actual sales – Break-even sales=1,40,000 – 88,000 =`52,000.`)

Illustration 17 (Calculation of selling price)A single product company sells its product at`60 per unit.In 2010, the company operated at