A company proposes to introduce a new product in the market. The company wants to maintain P/V ratio at…
Since the Profit-Volume (P/V) ratio is 25%, the Variable Cost ratio is 100% - 25% = 75% of the selling price. Given a variable cost of Rs. 300 per unit, the selling price is…
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A company proposes to introduce a new product in the market. The company wants to maintain P/V ratio at 25%. If variable cost of the product is Rs.300, what will be the selling price?
Answer and explanation
Correct answer A
Since the Profit-Volume (P/V) ratio is 25%, the Variable Cost ratio is 100% - 25% = 75% of the selling price. Given a variable cost of Rs. 300 per unit, the selling price is Rs. 300 / 0.75 = Rs. 400 per unit.
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UGC NET Commerce