When the volume is 3,000 units, the average cost is ₹4 per unit. When the volume is 4,000 units, the average cost is ₹3.50 per unit. The break-even point is 5,000 units. What is the P/V ratio of the firm —
CS Executive · Cost and Management Accounting · PYQS · December 2014
When the volume is 3,000 units, the average cost is ₹4 per unit. When the volume is 4,000 units, the average cost is ₹3.50 per unit. The break-even point is 5,000 units. What is the P/V ratio of the firm —
Answer & Explanation:
Correct Answer: Option (B)
Correct answer: (B) 37.5%. Variable cost per unit = (14,000−12,000)/(4,000−3,000) = 2; fixed cost = 6,000. Break-even contribution/unit = 6,000/5,000 = 1.20. Selling price = 3.20 and P/V ratio = 37.5%.
Topics: Marginal Costing
Related Questions in this Topic
- 99. A factory is currently working at 50% of its capacity. At this level the variable, semi-variable and fixed expenses ...
- 91. When fixed cost is ₹8,000 and break-even point is ₹20,000, find the profit when sales is ₹30,000 :
- 78. Maximum quantity of production and minimum quantity of production is 10,000 and 5,000 units respectively. Maximum to...
- 46. P/V Ratio of a company is 17% and its Margin of Safety is ₹4,08,000, calculate the amount of profit to the company.
- 44. When the sales increased from ₹40,000 to ₹60,000, profit increased by ₹5,000. Calculate P/V ratio.