Calculation of P/V ratio, B.E.P. and Margin of Safety

Given:
- Number of units produced = 300
- Selling price per unit = RS 200
- Marginal cost of production per unit = Rs 120
- Fixed cost for the month = Rs 8000

Calculations:

P/V ratio:
- P/V ratio = (Contribution / Sales) x 100
- Contribution = Selling price per unit - Marginal cost per unit
- Contribution = Rs 200 - Rs 120 = Rs 80
- Sales = Number of units produced x Selling price per unit
- Sales = 300 x Rs 200 = Rs 60,000
- Contribution = 300 x Rs 80 = Rs 24,000
- P/V ratio = (Rs 24,000 / Rs 60,000) x 100 = 40%

B.E.P.:
- B.E.P. (in units) = Fixed cost / Contribution per unit
- Contribution per unit = Selling price per unit - Marginal cost per unit
- Contribution per unit = Rs 200 - Rs 120 = Rs 80
- B.E.P. (in units) = Rs 8000 / Rs 80 = 100 units

Margin of Safety:
- Margin of Safety (in units) = Actual sales - B.E.P. sales
- Actual sales = Number of units produced x Selling price per unit
- Actual sales = 300 x Rs 200 = Rs 60,000
- B.E.P. sales = 100 x Rs 200 = Rs 20,000
- Margin of Safety (in units) = Rs 60,000 - Rs 20,000 = 200 units

Explanation:
- The P/V ratio is a measure of the relationship between the contribution and sales. It indicates the percentage of each rupee of sales that is available to cover the fixed costs and provide a profit. In this case, the P/V ratio is 40%, which means that for every rupee of sales, 40 paise is available to cover the fixed costs and provide a profit.
- The B.E.P. is the level of sales at which the total cost is equal to the total revenue, i.e., the company neither makes a profit nor incurs a loss. In this case, the B.E.P. is 100 units, which means that the company needs to sell at least 100 units to cover its fixed and variable costs.
- The Margin of Safety is the difference between the actual sales and the B.E.P. sales. It indicates the level of sales above the B.E.P. at which the company starts making a profit. In this case, the Margin of Safety is 200 units, which means that the company can sell up to 200 units above the B.E.P. level before it starts incurring a loss.