Question

You are required to compute P/V Ratio, B.E.P and Margin of Safety from the following

data :

Sales (1,00,000 units) Rs.2,00,000

Variable cost Rs.80,000

Fixed cost Rs.40,000
Also evaluate the effect of (a) 20% increase in variable costs and (b) 20% increase in

quantity sold on the above mentioned three measures.​

Answer 1

here is my solved solution

Answer 2

Given:

Sales = 2,00,000 ( 1,00,000 units)

Variable Cost = VC = 80,000

Fixed cost = FC = 40,000

To Find:

B.E.P, MOS , P/v Ratio and f (a) 20% increase in variable costs and (b) 20% increase in  quantity sold.

Solution:

P/v ratio = Sales - VC/ sales x 100

= 2,00,000 - 80,000/2,00000 x 100

= 1,20,000/2,00,000 x 100

= 1,20,000,00/2,00,000

= 60%

Break even point (BEP) = Fixed Cost/ P/v Ratio

= 40,000/60%

= 66,667

Margin of Safety ( MOS) = Sales - BEP

= 2,00,000 - 66,667

= 1,33,333

20% increase in VC

NVC = 80,000 + 20% of 80,000

= 80,000 + 16,000

= 96,000

P/v ratio = 2,00,000 - 96,000/2,00,000 x 100

= 52%/

Break even point (BEP) = Fixed Cost/ P/v Ratio

= 40,000/52%

= 76923

Margin of Safety ( MOS) = Sales - BEP

= 2,00,000 - 76,923

= 1,23, 077

20% increase in Quantity sold

Sales = ( 1,00,000 + 2,00,000 ) x 2  

= 2,40,000

P/v ratio = 2,40,000 - 80,000/2,40,000 x 100

= 66.67

BEP = 40,000/66.67

= 60,000

MOS = 2,40,000 - 60,000

= 1,80,000