marginal costing

 P/v ratio is contribution in terms of %age on sales.

Contribution on MOS is nothing but profit.

so when we calculate P/V on MOS we will get contribution on MOS i.e profit.

the original formula is Profit = MOS*P/V ratio

From that we can change this formula in different manner.

Request to other members eplore it if possible

Total Sales have to parts :

1. BEP Sales  (e.g. 60%)

2. Margin of Safety Sales (e.g. 100-60=40%)

From BEP Sales, there will b NO PROFIT...

PROFIT will be from MOS SALES....

P/V RATIO represents the profit earning capacity..

So we can formulaise it as below :

PROFIT = MOS Sales * P/V Ratio

or

MOS Sales = PROFIT divided by P/V Ratio

Adarsh

thnk u ol!