P/V Ratio 50%; Variable cost of the produce Rs. 25; Selling price is .a.Rs. 30 .b.Rs. 40.c.Rs. 55.d.Rs. 50 .
Question
P/V Ratio 50%; Variable cost of the produce Rs. 25; Selling price is
- a. Rs. 30
- b. Rs. 40
- c. Rs. 55
- d. Rs. 50
Solution
The P/V ratio, also known as the profit-volume ratio, is a measure of the profitability of a product. It is calculated as the difference between the selling price and the variable cost, divided by the selling price, expressed as a percentage.
Given: P/V Ratio = 50% Variable cost = Rs. 25
We can use the formula: P/V Ratio = (Selling Price - Variable Cost) / Selling Price
Let's calculate the selling price for each option:
a. If the selling price is Rs. 30: 50% = (30 - 25) / 30 50% = 5 / 30 = 16.67% This does not match the given P/V ratio of 50%, so this option is incorrect.
b. If the selling price is Rs. 40: 50% = (40 - 25) / 40 50% = 15 / 40 = 37.5% This does not match the given P/V ratio of 50%, so this option is incorrect.
c. If the selling price is Rs. 55: 50% = (55 - 25) / 55 50% = 30 / 55 = 54.55% This does not match the given P/V ratio of 50%, so this option is incorrect.
d. If the selling price is Rs. 50: 50% = (50 - 25) / 50 50% = 25 / 50 = 50% This matches the given P/V ratio of 50%, so this option is correct.
Therefore, the selling price of the product should be Rs. 50.
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