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From the following particulars calculate : a) P/V Ratio. b) Breakeven point in units and in rupees. Fixed expenses Rs. 1,50,000 Variable Cost per unit Rs. 10 Selling price per unit Rs.15?
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From the following particulars calculate : a) P/V Ratio. b) Breakeven ...
P/V Ratio and Breakeven Point Calculation
Particulars
- Fixed expenses: Rs. 1,50,000
- Variable cost per unit: Rs. 10
- Selling price per unit: Rs. 15
P/V Ratio Calculation
The P/V ratio is the contribution margin as a percentage of sales. It helps a business to understand how much profit it can make on each sale. The formula for calculating the P/V ratio is:
P/V Ratio = (Contribution/Sales) x 100
Where,
- Contribution = Selling price per unit - Variable cost per unit
- Sales = Total Sales
Using the above formula, we can calculate the P/V ratio as:
P/V Ratio = ((15-10)/15) x 100 = 33.33%
Breakeven Point Calculation
The breakeven point is the point at which the total cost of production is equal to the total revenue generated. The formula for calculating the breakeven point in units is:
Breakeven Point (Units) = Fixed Expenses/Contribution per unit
Using the above formula, we can calculate the breakeven point in units as:
Breakeven Point (Units) = 1,50,000/(15-10) = 30,000 units
Similarly, the breakeven point in rupees can be calculated as:
Breakeven Point (Rupees) = Breakeven Point (Units) x Selling Price per unit = 30,000 x 15 = Rs. 4,50,000
Explanation
The P/V ratio and breakeven point are important tools for businesses to make informed financial decisions. The P/V ratio helps businesses to understand the contribution that each sale makes towards covering the fixed expenses and generating a profit. A higher P/V ratio indicates a higher contribution towards the fixed costs and a greater capacity to generate profits. The breakeven point helps businesses to understand the level of production that is required to cover the fixed costs and generate enough revenue to break even. This helps businesses to make decisions about pricing, production levels, and sales strategies that can increase profits and reduce costs.
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From the following particulars calculate : a) P/V Ratio. b) Breakeven point in units and in rupees. Fixed expenses Rs. 1,50,000 Variable Cost per unit Rs. 10 Selling price per unit Rs.15?
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From the following particulars calculate : a) P/V Ratio. b) Breakeven point in units and in rupees. Fixed expenses Rs. 1,50,000 Variable Cost per unit Rs. 10 Selling price per unit Rs.15? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about From the following particulars calculate : a) P/V Ratio. b) Breakeven point in units and in rupees. Fixed expenses Rs. 1,50,000 Variable Cost per unit Rs. 10 Selling price per unit Rs.15? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for From the following particulars calculate : a) P/V Ratio. b) Breakeven point in units and in rupees. Fixed expenses Rs. 1,50,000 Variable Cost per unit Rs. 10 Selling price per unit Rs.15?.
From the following particulars calculate : a) P/V Ratio. b) Breakeven point in units and in rupees. Fixed expenses Rs. 1,50,000 Variable Cost per unit Rs. 10 Selling price per unit Rs.15? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about From the following particulars calculate : a) P/V Ratio. b) Breakeven point in units and in rupees. Fixed expenses Rs. 1,50,000 Variable Cost per unit Rs. 10 Selling price per unit Rs.15? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for From the following particulars calculate : a) P/V Ratio. b) Breakeven point in units and in rupees. Fixed expenses Rs. 1,50,000 Variable Cost per unit Rs. 10 Selling price per unit Rs.15?.
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