Calculation of PV Ratio and Fixed Cost

Particulars:
- 1st year sales: Rs 130000
- 1st year profit: Rs 6000
- 2nd year sales: Rs 150000
- 2nd year profit: Rs 10000

Calculation of PV Ratio:
- PV Ratio = Contribution/Sales x 100
- Contribution = Sales - Variable Cost
- To calculate contribution, we need to first calculate the variable cost.
- We can use the profit figures to derive the variable cost as follows:

1st year:
- Profit = Sales - (Fixed Cost + Variable Cost)
- 6000 = 130000 - (Fixed Cost + Variable Cost)
- Variable Cost = 124000 - Fixed Cost

2nd year:
- Profit = Sales - (Fixed Cost + Variable Cost)
- 10000 = 150000 - (Fixed Cost + Variable Cost)
- Variable Cost = 140000 - Fixed Cost

- Now we can calculate contribution:

1st year:
- Contribution = 130000 - (124000 - Fixed Cost)
- Contribution = 6000 + Fixed Cost

2nd year:
- Contribution = 150000 - (140000 - Fixed Cost)
- Contribution = 10000 + Fixed Cost

- Finally, we can calculate the PV Ratio:

1st year:
- PV Ratio = (6000 + Fixed Cost)/130000 x 100

2nd year:
- PV Ratio = (10000 + Fixed Cost)/150000 x 100

Calculation of Fixed Cost:
- We can use the profit figures and the PV Ratio to derive the fixed cost as follows:

1st year:
- PV Ratio = (6000 + Fixed Cost)/130000 x 100
- 15 = (6000 + Fixed Cost)/1300
- Fixed Cost = 19500

2nd year:
- PV Ratio = (10000 + Fixed Cost)/150000 x 100
- 20/3 = (10000 + Fixed Cost)/15000
- Fixed Cost = 18333.33

Explanation:
- PV ratio is the ratio of contribution to sales expressed as a percentage.
- Fixed cost refers to the costs that do not vary with the level of production or sales.
- To calculate the PV ratio and fixed cost, we need to first calculate the variable cost.
- We can use the profit figures to derive the variable cost.
- Once we have the variable cost, we can calculate the contribution and then the PV ratio.
- Finally, we can use the PV ratio and profit figures to derive the fixed cost.