pv ratios

jkc

have i got the correct formula please?
Pv ratio = contribution/selling price
then use this to find Break even sales revenue Fixed cost/Pv ratio

I have been using Break even in units multiplied by Unit price to find break even sales revenue.
Do i need to know the pv formula if I can find the BE sales rev bythis method. as im am having reall trouble memorising pv.
thanks.

SandyHood

2 formulae

contribution per unit/ price

or
total conribution/total revenue

the second could be used by a firm with several products differently priced

in this case you could not have a break even number of units, only break even sales revenue

It hasn't been tested since it was added to the syllabus - in my humble opinion it is overdue, but it might be something the examiner does not intend to test.

jkc

thanks sandy.