Profit/Volume Ratio

lmr72

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

A-Vic

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

SandyHood

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

lmr72

Thanks