Determine the P/V ratio from the following particulars.
· Total Fixed Cost = ₹12,000
· Actual Sales = ₹48,000
· Margin of Safety = ₹8,000

Correct option is C

To determine the P/V Ratio (Profit/Volume Ratio), we use the formula:

P/V Ratio $$=\frac {Contribution} {Sales} ×100$$

where:

Contribution = Sales – Variable Cost

We can also calculate Contribution using the Margin of Safety (MOS) and Fixed Cost:

Margin of Safety = Actual Sales – Break-even Sales

Break-even Sales = Actual Sales– Margin of Safety = 48, 000 – 8,000 =40,000

At Break-even Sales, Contribution = Fixed Cost:

Contribution = Fixed Cost + Profit

Since at break-even point, profit is zero, we get:

Contribution = 12,000

Now, P/V Ratio is:

P/V Ratio = $$\frac {Contribution} {Sales} ×100 = \frac {12,000} {40,000} ×100=30$$​​