Q. 2. Define Contribution and Break-Even Point (BEP)

Answer Contribution: The term contribution refers to the excess of selling price over variable cost of a product. Thus, it is a difference between sale price and variable cost. Contribution (C) = Sales – Variable Cost or Fixed Cost + Profit Example When sale is $80,000 variable cost 40,000, fixed cost $30,000. Calculate contribution. Contribution …

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Q. 3. Define Cost Volume Profit (C.V.P), Profit Volume Ratio (PVR) and Margin of Safety (MOS).

Answer Cost Volume Profit (C. V. P.). Profit depends upon many factors, but most important is the cost of Manufacturer, volume of sales and selling price of the product. The three factors of cost, volume and profit are inter-connected and dependent on each other. Profit depends upon sales, slaes price depends upon cost, volume of …

Read moreQ. 3. Define Cost Volume Profit (C.V.P), Profit Volume Ratio (PVR) and Margin of Safety (MOS).