If Sales are Rs 1 00 000 Variable cost is 80 000 Fixed cost is 10 000 P V ratio will be ........

Costing - Phase (I & II) Basics of Cost Control and Analysis

Download Solution PDF

If Sales are Rs. 1,00,000/-, Variable cost is 80,000/-, Fixed cost is 10,000, P/V ratio will be:

80%

20%

10%

None of the above.

छोटे Courses बड़े Results

Master Basics of Cost Control and Analysis

Prepare through Micro-courses

Try Now

Explanation:

P/V ratio establishes the relationship between contribution and sales. It shows the amount of contribution per rupee of sales. It is also called contribution to sales ratio. It is measurement of the rate of change of profit due to change in volume of sales. Profit / Volume Ratio (P/V ratio) can be calculated as: Contribution/ Sales x 100.

In the given problem, P/V ratio = 20,000/1,00,000 x 100 = 20%