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Profit/Volume Ratio

lmr72lmr72 New MemberRegistered Posts: 10
Please could someone help me I'm have a blamk moment!!

How do you calculate profit/volume ratio?

I am trying to revise Unit 6 but I'm really struggling

Comments

  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    lmr72 wrote: »
    Please could someone help me I'm have a blamk moment!!

    How do you calculate profit/volume ratio?

    I am trying to revise Unit 6 but I'm really struggling

    Contribution / sales
  • SandyHoodSandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    There are 2 ways
    1. Contribution per unit divided by Price per unit
    2. Total contribution divided by total revenue

    Typically the business will have lots of products and services at different prices so break even in terms of units sold would not be meaningful

    Then you'd calculate the PV ratio (using the second way) and put this into the formula
    ...................Total fixed cost
    .........................PV ratio

    To give the breakeven valueof sales
    Sandy
    [email protected]
    www.sandyhood.com
  • lmr72lmr72 New Member Registered Posts: 10
    Thanks
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