Question
ABC sports material manufacturing company budgeted the
following data for the coming year: Sales (1,00,000 units) = ₹1,00,000 Variable cost = ₹40,000 Fixed cost = ₹50,000 Find out the P/V Ratio, B.E.P and Margin of Safety.Solution
Sales1,00,000 Variable Cost (40,000) Contribution 60,000 PV Ratio = Contribution/Sales * 100 60,000/100,000 = 60% B.E.P. = Fixed Cost/Contribution per unit 50,000/0.6 = 83,333 Contribution per unit = 60,000/1,00,000 units =0.6 MOS = Total sales – BEP sales 1,00,000-83,333 = 16,667
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