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P/v ratio

IPCC Student


PLzz Anyone can help me out???

How P/V Ratio = Profit / Margin of Safety ???

 
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Let Sale be 3,00,000 , Variable cost be 240,000 Contribution will be 60,000( sale - Vcost)

 

Now BES be 40% of Actual sale that comes to 1,20,000 and  cont come to 24,000 ( sale * P/v ratio) 

MOS will be 60 % of Actual sale that comes to 180,000 and cont comes to 36,000( sale * p/v ratio)

and fixed cost in MOS is always 0 and rest of all is profit that is 36,000.

Profit =36,000

and Profit/MOS = 36000/180,000

                             =20% which is equal to P/v Ratio.

It's easy just make a table and follow the formula you will come to know okey .

All the Best

 
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asharockz7@gmail.com


Margin of safety(value) = Profit/PV ratio.. PV ratio = profit/(profit/PV ratio) Profit gets cancel.. Hence left out is PV ratio...

 
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Originally posted by : Mary Asha
Margin of safety(value) = Profit/PV ratio..
PV ratio = profit/(profit/PV ratio)
Profit gets cancel.. Hence left out is PV ratio...

 
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MANAGER ACCOUNTS


                            SALES                        ....................

               LESS.  VARIABLE COST    .......................

                              CONTRIBUTION............................

               LESS      FIXED COST.................................

                                    PROFIT        ...............................

 

                               P/V RATIO=-CONTRIBUTION *100/SALES

                               MARGIN OF SAFETY=     ACTUL SALES - BEP SALES.

                                

 
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1.MARGIN OF SAFETY = ACTUAL SALES - BREAK EVEN SALES

2. MARGIN OF SAFETY = ACTUAL SALES - FIXED COST / PV RATIO

3. M/S = ACTUAL SALES * PV RATIO - FIXED COST

               ----------------------------------------------------------    { BY RULE OF LCM}

                                PV RATIO

 

4. M/S * PV RATIO = ( ACTUAL SALES * PVR ) - FIXED COST

5. M/S *PV RATIO= CONTRIBUTION- FIXED COST

6. PV RATIO= PROFIT / MS

 
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C V P CHAPTER IS THE EASIEST ONE .

 
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VAISE TOH , THE FORMULA FOR M/S IS ALSO = PROFIT /PVR

 
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