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    Question

    A company has achieved total sales of ₹10,00,000

    during the year. The variable costs incurred amount to ₹6,00,000, while the fixed costs are ₹2,50,000. Based on this information, you are required to calculate: The Profit–Volume (P/V) Ratio, and Margin of Safety (MOS) in monetary terms.
    A 40%, ₹4,75,000 Correct Answer Incorrect Answer
    B 40%, ₹3,75,000 Correct Answer Incorrect Answer
    C 30%, ₹2,50,000 Correct Answer Incorrect Answer
    D 35%, ₹3,00,000 Correct Answer Incorrect Answer
    E 45%, ₹4,00,000 Correct Answer Incorrect Answer

    Solution

    Contribution = 4,00,000. P/V ratio = 40%. BEP = FC / PVR = 2,50,000/0.4 = 6,25,000. MOS = Sales – BEP = 10,00,000 – 6,25,000 = ₹3,75,000.

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