# 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?

Aditi Kaur (Practising CA)    07 April 2013

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CMA Shilpa Shinde (COST ACCOUNTANT)     06 April 2013

##### CMA Shilpa Shinde
COST ACCOUNTANT
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Dear Student,

what Problem you have in Question.

CMA Shilpa Shinde (COST ACCOUNTANT)     10 April 2013

##### CMA Shilpa Shinde
COST ACCOUNTANT
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Which part is not clarified.

(Guest)

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

##### CMA Shilpa Shinde
COST ACCOUNTANT
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Dear Student,

Check Attached File.

Any Further Query, write here.

CMA Shilpa Shinde (COST ACCOUNTANT)     15 April 2013

##### CMA Shilpa Shinde
COST ACCOUNTANT
31 likes  217 points

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Dear Student,

Check Attached File.

Any Further Query, write here.

Arihant (nil)     12 September 2018

##### Arihant
nil
22 points

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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

Bhawni Nohal   23 November 2019

##### Bhawni Nohal

2 points

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 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?