Match List I with List II

LIST I

(Cost-Volume-Profit Identities)

LIST II 

(Underlying measurement)

A.

Operating Profit

I.

Actual sales volume - Breakeven sales volume

B.

Profit-Volume Ratio

II

Sales Revenue - Total variable costs

C.

Margin of safety

III.

(Sales × P/V ratio) - Fixed Cost

D.

Contribution margin

IV.

(Unit sale price - Variable costs per unit)/Unit sale price


Choose the correct answer from the options given below: 

This question was previously asked in
UGC NET Paper 2: Management 16th June 2023 Shift 1
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  1. A - II, B - I, C - IV, D - III
  2. A - III, B - IV, C - I, D - II
  3. A - III, B - I, C - II, D - IV
  4. A - IV, B - III, C - II, D - I

Answer (Detailed Solution Below)

Option 2 : A - III, B - IV, C - I, D - II
Free
UGC NET Paper 1: Held on 21st August 2024 Shift 1
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50 Questions 100 Marks 60 Mins

Detailed Solution

Download Solution PDF

The correct answer is A - III, B - IV, C - I, D - II.

Key Points 

Here's the explanation for each match:

A. Operating Profit:

Operating Profit is calculated by subtracting Total Variable Costs and Fixed Costs from Sales Revenue. Therefore, it matches (Sales × P/V ratio) - Fixed Cost.

B. Profit-Volume Ratio:

Profit-Volume Ratio is calculated by dividing Contribution Margin by Sales Revenue. This can be rewritten as (Unit sale price - Variable costs per unit)/Unit sale price. Therefore, it matches IV. (Unit sale price - Variable costs per unit)/Unit sale price.

C. Margin of safety:

Margin of safety is calculated by subtracting Breakeven Sales Volume from Actual Sales Volume. Therefore, it matches I. Actual sales volume - Breakeven sales volume.

D. Contribution margin:

Contribution Margin is calculated by subtracting Variable Costs from Sales Revenue. Therefore, it matches II. Sales Revenue - Total variable costs.

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