CAF-5 · Chapter 18 · Question 19 of 20
(CVP Analysis: Margin of Safety Ratio) C/S ratio 40%. Fixed costs Rs. 600,000. Operating at Margin of Safety of 25%. What is the actual sales revenue?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 2,000,000
Explanation
BE Sales = 600k / 0.4 = 1,500,000. MoS % = (Actual - BE) / Actual. 0.25 = (Actual - 1.5m) / Actual -> 0.75 Actual = 1.5m -> Actual Sales = Rs. 2,000,000.
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