If sales are Rs 1 00 000 Fixed Cost is Rs 20 000 P V ratio is 40 the contribution margin will ...........

Finance (Phase -I & II) Analysis of Financial Statements

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If sales are Rs. 1,00,000/-, Fixed Cost is Rs. 20,000/-, P/V ratio is 40%, the contribution margin will be:

Rs. 40,000/-

Rs. 20,000/-

Rs. 1,00,000/-

Rs. 48,000/-

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Explanation:

Contribution is the difference between sales and variable cost or marginal cost. It is excess of selling price over variable cost per unit. It can also be calculated as: P/V Ratio (x) Sales. In the given problem, contribution is 1,00,000/- (x) 40% = 40,000/-