If Sales are Rs 1,00,000, Variable Cost is Rs 60,000, what is the Contribution Margin Ratio (P/V Ratio)? MCQ with Answer and Explanation

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If Sales are Rs 1,00,000, Variable Cost is Rs 60,000, what is the Contribution Margin Ratio (P/V Ratio)?

A. 20%

B. 100%

C. 40%

D. 60%

Answer: Option C

Solution (By JKSSB Mock Tests)

Contribution = Sales - Variable Cost = 40,000. P/V Ratio = (Contribution / Sales) * 100 = 40%.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

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The 'Independent Director' under Companies Act is appointed for:

A. Small companies

B. All companies

C. Listed companies and certain prescribed classes of public companies

D. Private companies

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Correct Answer: Option C

Explanation:
Independent directors are required for listed companies and specified public companies.

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Question #2

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A 'Partner by Holding Out' is:

A. A retired partner

B. A deceased partner's legal heir

C. A minor admitted to benefits

D. A person who represents himself as a partner but is not

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Correct Answer: Option D

Explanation:
A person who by his conduct or words allows others to believe he is a partner may be held liable as partner by estoppel or holding out.

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Question #3

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If Cost of Goods Sold (COGS) is Rs 1,50,000 and Gross Profit is 20% on Sales, what is the Sales value?

A. Rs 1,75,000

B. Rs 2,00,000

C. Rs 1,80,000

D. Rs 1,87,500

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Correct Answer: Option D

Explanation:
If GP is 20% on sales, COGS is 80% on sales. Sales = COGS / 80% = 1,50,000 / 0.8 = Rs 1,87,500.

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