Maths focus: calculating the profit volume ratio by Dawn Weeden - The Solution

(a)
The PV ratio is:
(£235 - £94) = 0.6
£235

To calculate the sales revenue required to break even, divide the fixed costs by the PV ratio:
£52,875 = £88,125
0.6

(b)
The target profit is added to the fixed costs and then the total is divided by the PV ratio:

(c)
£52,875 + £17,625 = £117,500 sales required to make a profit of £17,625
0.6