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Discussion > Accounts > Cost Accounts >

P/v ratio

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IPCC Student


[ Scorecard : 24]
Posted On 23 November 2011 at 00:59 Report Abuse

PLzz Anyone can help me out???

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


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RAJESH CHOUDHARY
ASSISTANT MANAGER


[ Scorecard : 13890]
Posted On 23 November 2011 at 09:25

 

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





Mary Asha
asharockz7@gmail.com


[ Scorecard : 101]
Posted On 23 November 2011 at 10:29

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



srinivass
CA Final


[ Scorecard : 2456]
Posted On 23 November 2011 at 13:03

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...




CA PRAVEEN SINGH
MANAGER ACCOUNTS


[ Scorecard : 2237]
Posted On 23 November 2011 at 15:17

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

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

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

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

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

 

                               P/V RATIO=-CONTRIBUTION *100/SALES

                               MARGIN OF SAFETY=     ACTUL SALES - BEP SALES.

                                




yogeshwar malhotra
partner


[ Scorecard : 107]
Posted On 25 November 2011 at 17:51

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




yogeshwar malhotra
partner


[ Scorecard : 107]
Posted On 25 November 2011 at 17:52

C V P CHAPTER IS THE EASIEST ONE .




yogeshwar malhotra
partner


[ Scorecard : 107]
Posted On 25 November 2011 at 17:54

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



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