Match List I with List II: List-IList-II A. Margin of Safety I. Profit × sales/PV Ratio B. Break Even…
In Cost-Volume-Profit (CVP) analysis: Margin of Safety is calculated as Profit / P/V Ratio (or Profit × Sales / Contribution) (I); Break-Even Point is the volume of activity…
Choose your answer
Match List I with List II:
| List-I | List-II |
|---|---|
| A. Margin of Safety | I. Profit × sales/PV Ratio |
| B. Break Even Point | II. Difference between total revenue and total variable costs |
| C. P V Ratio | III. Total Sales-Total Variable Cost / Total Sales |
| D. Contribution | IV. Equality between contribution and total fixed costs. |
Answer and explanation
Correct answer B
In Cost-Volume-Profit (CVP) analysis: Margin of Safety is calculated as Profit / P/V Ratio (or Profit × Sales / Contribution) (I); Break-Even Point is the volume of activity where Total Contribution equals Total Fixed Costs (IV); P/V (Profit-Volume) Ratio is (Total Sales - Total Variable Cost) / Total Sales (III); and Contribution is the difference between Total Sales Revenue and Total Variable Costs (II).
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UGC NET Commerce