Profit/Volume Ratio

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lmr72
lmr72 Registered Posts: 7 New contributor 🐸
in AAT Level 3 (Level 6 in Scotland)
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

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  • A-Vic
    A-Vic Registered Posts: 6,868 Beyond epic contributor 🧙‍♂️
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    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
    SandyHood Registered, Moderator Posts: 2,027 mod
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    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
    sandy@sandyhood.com
    www.sandyhood.com
  • lmr72
    lmr72 Registered Posts: 7 New contributor 🐸
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    Thanks

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