The PV ratio or P/V ratio is arrived by using following formula. P/V ratio =contribution x100/sales (*Contribution means the difference between sale price and variable cost). Here contribution is multiplied by 100 to arrive the percentage.

What is PV ratio in marginal costing?

Profit-volume ratio indicates the relationship between contribution and sales and is usually expressed in percentage. The ratio shows the amount of contribution per rupee of sales. Similarly, if the marginal cost is reduced with sale price remaining same— profit-volume ratio improves. ...

What is contribution formula?

Formulae: Contribution = total sales less total variable costs. Contribution per unit = selling price per unit less variable costs per unit. Total contribution can also be calculated as: Contribution per unit x number of units sold.