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Sales ₹5,00,000, variable cost ₹3,00,000. P/V ratio is:

A60%
B40%
C30%
D50%
Answer & Solution
Correct answer: B. 40%
1. Contribution = Sales − Variable cost = 5,00,000 − 3,00,000 = ₹2,00,000. 2. P/V ratio = (Contribution / Sales) × 100 = (2,00,000 / 5,00,000) × 100. 3. = 40%. 4. The other options reflect arithmetic errors or inverted ratios. _Source: ICAI BoS Inter Paper 3, Ch 14 "Marginal Costing", §14.4 Illus 3_
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