Marginal costing



(Guest)

Hello friends, I have problem in following question so try to solve it .

A company has P/V ratio of 40%. By what percentage must sales be increased to offset:20% reduction in selling price?

 
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COST ACCOUNTANT

Dear Student,

what Problem you have in Question.

Are you not getting answer.

 

 
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COST ACCOUNTANT

What is your Calculation Steps and Answer.

Which part is not clarified.

 
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(Guest)

@ shilpa  madam

solution

suppose sales =100 units @ 1 each....................100

(-)contribution (40% of sales................................40

                                               ------------------------------------------------

variable cost..................1....................................60     

when selling price is reduced by 20%

new sales                                                          80

(-)variable cost                                                    60

                                                           ----------------------------

new contribution                                                  20

In order to maintain same level of contribution volume of sales should be (40/20*80)=160..........(step 1)

problem: iam facing problem in step no 1.can you explain me.

 
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COST ACCOUNTANT

Dear Student,

Check Attached File.

Any Further Query, write here.



Attached File : 392647 1163094 book11.xlsx downloaded 956 times
 
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COST ACCOUNTANT

Dear Student,

Check Attached File.

Any Further Query, write here.

 

 



Attached File : 392647 1163110 book11.xls downloaded 439 times
 
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Dear Shilpa Maam,

I have a question w.r.t to the above question aswel.

How can the Variable cost be same i.e (Rs. 60). Why not Revised Selling Price * 60% (100% - 40%) - So the revised Variable cost would be Rs.48 (80*60%).

Regards,

Arihant

 
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