Answer:
The P/V Ratio is the ratio of the price of a product to its variable cost. It can be calculated by dividing the sales price of the product by its variable cost.
The Margin of Safety is the difference between the expected sales and the break even point (B.E.P.). It can be calculated by subtracting the B.E.P. from the expected sales.
The Break Even Point (B.E.P.) is the point at which total revenue equals total cost. It can be calculated by subtracting the fixed cost from the profit.
In this case, the Profit is Rs. 20,000 and the Fixed Cost is Rs. 40,000. Therefore, the B.E.P. is Rs. 80,000.
Therefore, the Margin of Safety is Rs. 80,000 (the B.E.P.) minus Rs. 20,000 (the Profit) = Rs. 60,000.
The P/V Ratio can be calculated by dividing the Sales Price (the B.E.P. in this case) by the Variable Cost. Since the Variable Cost and Sales Price are both Rs. 80,000 in this case, the P/V Ratio is 1.