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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?

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9 Replies

CMA Shilpa Shinde (COST ACCOUNTANT) (217 Points)
Replied 06 April 2013

Dear Student,

what Problem you have in Question.

Are you not getting answer.

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CMA Shilpa Shinde (COST ACCOUNTANT) (217 Points)
Replied 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) (217 Points)
Replied 15 April 2013

Dear Student,

Check Attached File.

Any Further Query, write here.

Attached File : 392647 1163094 book11.xlsx downloaded: 2348 times

CMA Shilpa Shinde (COST ACCOUNTANT) (217 Points)
Replied 15 April 2013

Dear Student,

Check Attached File.

Any Further Query, write here.

Attached File : 392647 1163110 book11.xls downloaded: 1112 times

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Arihant (nil) (22 Points)
Replied 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 (2 Points)
Replied 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?

SIDDHARTH GUPTA (2 Points)
Replied 15 August 2021

Hello friends, I have a problem to solve :

In a company,the pv ratio is 40%.by what percentage must sales be increased to maintain the same contribution,when(a) 10% reduction in selling price..(b)20% decrease in selling price.....