Find out P V ratio if fixed cost is Rs 10 000 and break even sales is Rs 25 000 ........

Costing ( Revenue Account ) Basics of Cost Control and Analysis

Find out P/V ratio if fixed cost is Rs. 10,000 and break-even sales is Rs. 25,000 ?

60 percent

250 percent

100 percent

40 percent

- The P/V ratio, or profit-volume ratio, is a measure of the profitability of a product and indicates the contribution margin per unit of sales.

- The formula to calculate the P/V ratio is: $$ \text{P/V Ratio} = \left(\frac{\text{Contribution}}{\text{Sales}}\right) \times 100 $$

- At the break-even point, the contribution is equal to fixed costs.

- Therefore, $$ \text{P/V Ratio} = \left(\frac{\text{Fixed Costs}}{\text{Break-even Sales}}\right) \times 100 $$

- Substituting the given values: $$ \text{P/V Ratio} = \left(\frac{10,000}{25,000}\right) \times 100 = 40\% $$

- Option 4: 40 percent is correct.

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