A company proposes to introduce a new product in the market. The company wants to maintain…
The profit-volume ratio is contribution divided by sales. With a ratio of 25%, variable cost is 75% of selling price. Selling price = Rs 600/0.75 = Rs 800.
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A company proposes to introduce a new product in the market. The company wants to maintain profit-volume ratio at 25 percent. If variable cost of the product is Rs.600, what will be its selling price?
Answer and explanation
Correct answer D
The profit-volume ratio is contribution divided by sales. With a ratio of 25%, variable cost is 75% of selling price. Selling price = Rs 600/0.75 = Rs 800.
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Telangana SET (TG SET)