ANSWER 1:

UNDERSTADING AND USAGE OF FORMULA:

P/V Ratio (Profit Volume Ratio) is the ratio of contribution to deals which shows the
contribution gained with appreciation to one rupee of deals. It additionally gauges the pace of
progress of profit because of progress in volume of deals. That's what its crucial property is in
the event that per unit deals cost and variable cost are steady, P/V Ratio will be consistent at
every one of the degrees of exercises. A change is fixed cost doesn't influence P/V Ratio. It is
determined as under:

(Contribution * 100)/Deals

(Change in profits * 100)/(Change in deals)

A high P/V Ratio shows that a slight expansion in deals without expansion in fixed costs will
bring about higher profits. A low P/V ratio which demonstrates low profitability can be further
developed by expanding selling cost, diminishing negligible costs or selling items having high
P/V ratio.

Contribution:

It is the distinction between deals income and variable cost (otherwise called variable cost).
Variable cost is the significant cost in concluding profitability as fixed costs are disregarded by
minor costing.

It very well may be communicated in two ways:

• Deals Income - Variable Cost

• Fixed Cost + Profit

The circumstance producing higher contribution is treated as a profitable circumstance.

STEPS/PROCEDURE:

a) Contribution

Contribution = Selling price –Variable Cost Per unit

Contribution = 10,000 – (Raw Material + Power + Factory Wages (variable))

Contribution = 10,000 – (5,000 + 500 + 1,000)

Contribution = 10,000 – 6500

Contribution = 3500

b) PV Ratio

Contribution
PV Ratio ×100
Selling price per unit

3500
PV Ratio= ×100
10000

PV Ratio = 35%

c) BE Ratio (in no. of units and value)

BE Ratio(¿ number of units)=Total ¿ Costs ¿

PV ratio

Rent + Salaries+ Telecom∧Printing+Travel

BE Ratio(¿ number of units)=
PV ratio
 80000+100000+ 45000+250000
BE Ratio(¿ number of units)=
0.35

250000
BE Ratio(¿ number of units)=
0.35

BE Ratio ( ¿ number of units ) = 714286 units

d) MOS at actual sales of Rs. 9,00,000/-

Actual Sales−Break Even Sales

MOS= × 100
Actual sales

Break Even Sales=Total ¿ Costs ¿

PV Ratio

250000
Break Even Sales=
0.35

Break Even Sales=714286

900000−714286
MOS= ×100
900000

MOS=20.80 %

e) Number of watches to be sold to get a profit of Rs. 18,000/-

Total Profit required = Desired Profit per unit × Number of Units

Desired Profit per unit = Selling Price Per unit – Total Variable Cost per unit

Desired Profit per unit = Rs. 10000 – Rs. 6500

Desired Profit per unit = Rs. 3500

Number of Units = Total Profit required / Desired Profit per unit

Number of Units = 18000 / 3500

Number of Units = 5.14

Peripheral Cost:

Peripheral cost is the extra cost of delivering an extra unit of an item. Minor cost is characterized
by I.C.M.A, London as 'the sum at some random volume of result by which total costs are
changed in the event that the volume of result is expanded or diminished by one unit. Practically
speaking, this is estimated by the total variable costs inferable from one unit".

Earn back the original investment Point:

Make back the initial investment Point is the degree of deals expected to arrive at a place of no
profit, no misfortune. At Earn back the original investment Point, the contribution is only
adequate to take care of the proper expense. The association begins procuring profit when the
deals cross the Equal the initial investment Point. Make back the initial investment Point can be
determined either regarding units or concerning cash or concerning limit use. It tends to be
determined as follows:

BEP in units = Fixed Cost/Contribution per unit

BEP in real money = Fixed Cost/P.V. Ratio

BEP with regards to limit usage = (BEP in units/Total limit) x 100

Equal the initial investment Diagram:

The equal the initial investment diagram is a graphical portrayal of cost-volume profit
relationship. It portrays the accompanying:

a) Profitability of the firm at various degrees of result.

b) Equal the initial investment point - No profit no misfortune circumstance.

c) Point of Occurrence: This is the place where the total deals line reduces the total expense line.
It is shows as point Θ (theta). On the off chance that the point is enormous, the firm is said to
create gains at a high rate as well as the other way around.

d) Connection between factor cost, fixed costs and the contribution.

e) Edge of wellbeing addressing the distinction between the total deals and the deals at
breakeven point.

CORRECT ANSWER AND INTERPRETATION:

The Profit Volume (PV) Ratio is a significant monetary metric that gives experiences into an
organization's monetary exhibition. By working out the PV ratio, organizations can understand
the connection between deals volume and profitability, pursue informed choices, and plan for
what's to come. In any case, the PV ratio has constraints, like expecting direct connections and
disregarding non-volume-related costs. Organizations ought to involve the PV ratio related to
other monetary measurements and consider its restrictions when deciphering its results.It is
critical to examine changes in the PV ratio after some time to distinguish drifts and evaluate the
effect of changes in pricing, costs, and deals volume on profitability. A diminishing PV ratio
might demonstrate that the organization needs to survey its pricing strategies or decrease its costs
to keep up with profitability. Then again, a rising PV ratio recommends that the organization is
working on its profitability and working all the more proficiently.

Deciphering the PV ratio includes investigating the rate value got from the estimation and
understanding what it shows about an organization's profitability. It is critical to consider the
business where the organization works and to break down changes in the PV ratio after some
time to recognize regions for development in the organization's monetary execution.

ANSWER 2:

UNDERSTADING AND USAGE OF FORMULA:

A pricing technique is a model or strategy used to lay out the best cost for an item or
administration. It assists you with picking costs to boost profits and investor value while
considering customer and market demand.

If by some stroke of good luck pricing was basically as straightforward as its definition — there's
a ton that goes into the cycle.

Pricing strategies represent large numbers of your business factors, similar to income objectives,
advertising goals, interest group, brand situating, and item credits. They're additionally impacted
by outside factors like shopper demand, competitor pricing, and generally market and financial
patterns.

It's normal for business people and entrepreneurs to skim over pricing. They often take a gander
at the cost of their items (Gear-teeth), think about their competitor's rates, and change their own
selling cost by a couple of dollars. While your Gear-teeth and competitors are significant, they
ought not be at the focal point of your pricing methodology.

The best pricing technique expands your profit and income.

Before we discuss pricing strategies, we should survey a significant pricing concept that will
apply paying little mind to what strategies you use.

STEPS/PROCEDURE:

a. Cost Plus Pricing to earn a profit of 10%

¿Cost
Price Per Glass=Variable Cost Per Glass+
Number of Galsses

300000
Price Per Glass=45+
20000

Price Per Glass = 45 + 15

Price Per Glass = Rs. 60

10
Margin of Profit= × 60
100

Margin of Profit = Rs.6

Selling Price per Glass = Rs. 60 + Rs.6

Selling Price per Glass = Rs. 66

b. Variable Cost Plus contribution to earn a contribution margin of 20%

20
Controbution Margin= × 45
100
Contribution Margin = Rs. 9

Making a profit each glass sold = Rs. 45 + Rs.9

Making a profit each glass sold = Rs. 54

There are two fundamental strategies for pricing your items and administrations: cost-plus and
value-based pricing. The most ideal decision relies upon your kind of business, what impacts
your customers to purchase and the idea of your opposition.

Cost-plus pricing

This takes the cost of delivering your item or administration and adds a sum that you really want
to create a gain. This is generally communicated as a level of the cost.

It is for the most part more fit to organizations that arrangement with enormous volumes or
which work in business sectors overwhelmed by rivalry on cost.

Yet, cost-plus pricing disregards your picture and market situating. And secret costs are handily
neglected, so your actual profit per deal is often lower than you understand.

Value-based pricing

This spotlights on the cost you accept customers will pay, in light of the advantages your
business offers them.

Value-put together pricing depends with respect to the strength of the advantages you can
demonstrate you offer to customers.

Assuming you have plainly characterized benefits that give you a benefit over your competitors,
you can charge as indicated by the value you offer customers. While this approach can
demonstrate truly profitable, it can estrange potential customers who are driven exclusively by
cost.

Pricing administrations

At the point when you put a value on your administrations, as opposed to working from a unit
value, you should consider cautiously about the value of your skill and other helpful parts of
your administration, for example, a quick reaction time or out-of-hours administration.

For instance, an IT professional who can determine an issue in two hours will be worth more to
the customer than one who requires two days. They would have the option to charge something
else for their administration, in spite of it taking less worker hours.

Doing statistical surveying and taking a gander at your competitors will assist you with
understanding the degree of administration customers expect at your price tag.

Pricing in view of approximating and historical costs overlooks profits and development.
Effective organizations have depended on cost-based and value-based pricing strategies to set
ideal costs. Get familiar with the natural rationales and key contrasts behind these strategies to
pursue pricing choices with certainty.

Cost-based pricing can be depicted as a methodology to decide the selling costs of an

organization's items in view of their creation costs, while value-based pricing is a system of
setting costs of an item or administration in light of its value seen by customers.

The accompanying table shows a few vital contrasts between cost-based pricing and value-based
pricing:

Areas Cost-based pricing Value-based pricing

 Focuses on the costs when Focuses on the customers when determining
Focus
determining price price

The price is set in a range determined by what

The price is set between the floor
Price customers are willing to pay. The price is often
and ceiling amount, usually
s equal or higher than if cost-based pricing was
influenced by market conditions.
used.

CORRECT ANSWER AND INTERPRETATION:

Your pricing procedure is affected by your organization's monetary information and outer
circumstances. This incorporates:

• Knowing the cost of your labor and products to assist you with settling on better business
choices

• Keeping a nearby eye on these costs to quickly answer improvements and keep your
business profitable over the long haul

• Your shoppers, the market, and your competitors

• Staying informed concerning changing customer tastes and economic situations, as well
as potential production network issues

Setting exact costs for your inventory is perhaps of the main thing you can do to guarantee
proceeding with progress in your business. It doesn't make any difference in the event that you
have the best item on the planet, the best group, or the most alluring storefront; on the off chance
that you can't value your items productively and don't have a viable pricing procedure set up,
your deals will endure.
ANSWER 3(A):

INTRODUCTION:

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CONCEPT:

1. Fast Ratio

In the event that you're contemplating whether your business can meet its momentary obligation
commitments, you might need to work out the fast ratio, otherwise called the analysis ratio. A
liquidity ratio, to begin, you'll have to get your ongoing fluid resources, inventory, and current
risk totals, all found on your monetary record.

Fast Ratio = (Current Resources - Inventory)/Current Liabilities

For instance, your ongoing resources, including debt claims, total $7,500,000, with inventory of
$3,500,000 and liabilities of $1,750,000. Utilizing these numbers, we should work out your
speedy ratio.

($7,500,000 - $3,500,000)/$1,750,000 = 2.28

This outcome demonstrates that for each dollar of liabilities your business has $2.28 in resources.
A coordinated ratio is important to cover your liabilities, yet much else is all overabundance
cash. However, be mindful so as not to allow it to get too high. A few investors view a high
speedy ratio as a business not utilizing its resources forcefully enough.

2. Current Ratio

Like the fast ratio, the ongoing ratio is a liquidity ratio used to decide how well you're ready to
take care of obligation, including interest cost.

In the first place, acquire your resource and responsibility totals from your asset report.

Current Ratio = Current Resources/Current Liabilities

Utilizing similar totals utilized in the speedy ratio, short inventory, this is the way you would
ascertain the ongoing ratio:

$7,500,000/$1,750,000 = 4.28

This intends that for each dollar of liabilities, your business has $4.28 in resources. Once more, a
coordinated outcome is vital, and like the speedy ratio, too high of an ongoing ratio can
demonstrate that you're not utilizing your resources forcefully enough.
CONCLUSION:

1. Monetary ratios are an essential indicator of an organization's in general monetary presentation

and wellbeing.

2. These ratios offer significant experiences into different parts of the organization's operations,
including its monetary outcomes, expected gambles, and operational proficiency. They cover
significant regions, for example, liquidity, resource turnover, working profitability, business risk,
monetary gamble, and dependability.

3. A proficiency ratio of 100 percent or higher is viewed as a positive sign, showing that the
organization is really using its assets to produce income and boost its operational productivity.

ANSWER 3(B):

UNDERSTADING AND USAGE OF FORMULA:

Budgeted income is a forecast you can make about the income you intend to procure in the
following year. Ordinarily, you can separate this income to month to month income, assisting
you with laying out objectives for advertising and outreach groups. The greater part of an
association's income comes from deals. Deals are the quantity of items or administrations the
association offers to customers. Utilizing budgeted income can assist you with defining creation
objectives for groups inside a business.

STEPS/PROCEDURE:

Particulars P Q R S Sub Total Total

(A)No. OF Units 20000 30000 40000 100000
 (B) Sales Price 100 50 25 45
(C) Variable Cost 40 20 5 25
(D) Revenue ( A × B) 2000000 1500000 1000000 4500000 9000000
(E) Total Variable Cost (A × C) 800000 600000 200000 2500000 4100000
(F) Semi Variable Cost (w. note
1) 1050000
(G) Fixed Costs 200000
(H) Total Cost (E + F+ G) 5350000
(I) Budgeted Profit (D-H) 3650000

W. Note 1

Fixed Component of semi variable expenses = Rs. 150000

Variable component of semi variable expenses = Rs. 10 per unit of production beyond 100000
units

Total units beyond = Total units – 100000

Total units beyond = (20000 + 30000 + 40000 + 100000) – 100000

Total units beyond = 190000 – 100000

Total units beyond = 90000

Variable component of semi variable expenses = 10 × 90000

Variable component of semi variable expenses = 900000

Total semi variable expenses = Fixed component + Variable Component

Total semi variable expenses = 150000 + 900000

Total semi variable expenses = 1050000

1. Costs

Cause a rundown of all costs that to add to the profitability of the organization, including rent
and utilities, managerial costs, staff compensations, transport, publicizing and some other
working costs, including things that are paid yearly, for example, finance charges. Remember
regularly scheduled installments for capital things, for example, gear, that are bought on a
portion plan.

2. Profit

You can get your budgeted net profit for the period by ascertaining the amount of the cost of
deals and the costs, and taking away this number from your extended deals for the period.

CORRECT ANSWER AND INTERPRETATION:

When you pick an income model and find the expectation for the association's income, you can
look at the value you get from your date with the objective you set. On the off chance that the
values are moderately close, you can set your financial plan and push ahead in your creation
year. In the event that the values fluctuate generally, reanalyze your objective, particularly
assuming it is much higher than your expectation models. Like that, you can set a practical
budgeted income to put together objectives with respect to consistently.