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What establishes the relationship between contribution & sales?

5. What establishes the relationship between contribution & sales?

  1. Marginal Costing
  2. Absorption Costing
  3. Profit Volume Ratio
  4. Fixed Cost Ratio

Answer: C) Profit Volume Ratio

Explanation:

The Profit Volume (P/V) Ratio is the estimation of the pace of progress of benefit because of progress in the volume of deals. It is one of the significant proportions for figuring benefit as it demonstrates commitment got with an appreciation of deals. The PV proportion or P/V proportion is shown up by utilizing the following equation.

P/V proportion =contribution x100/deals (*Contribution implies the distinction between deal cost and variable expense).

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