Marginal costing

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(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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CMA Shilpa Shinde (COST ACCOUNTANT) 06 April 2013

Dear Student,

what Problem you have in Question.

Are you not getting answer.

CMA Shilpa Shinde (COST ACCOUNTANT) 10 April 2013

What is your Calculation Steps and Answer.

Which part is not clarified.

(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.

CMA Shilpa Shinde (COST ACCOUNTANT) 15 April 2013

Dear Student,

Check Attached File.

Any Further Query, write here.

Attached File : 392647 1163094 book11.xlsx downloaded: 1153 times

CMA Shilpa Shinde (COST ACCOUNTANT) 15 April 2013

Dear Student,

Check Attached File.

Any Further Query, write here.

Attached File : 392647 1163110 book11.xls downloaded: 519 times

Arihant (nil) 12 September 2018

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

Bhawni Nohal 23 November 2019

Originally posted by : Member (Account Deleted)
	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?