Question : Average Inventory Rs.80,000
Inventory Turnover Ratio 6 times
Selling Price 25% above cost
Gross profit is -------
Option 1: Rs 1,20,000
Option 2: Rs 80,000
Option 3: Rs 60,000
Option 4: None of the above
Answer (1)
18th Jan, 2024
Correct Answer: Rs 1,20,000
Solution : Answer = Rs 1,20,000
I.T. Ratio $=\frac{\text { Cost of goods sold }}{\text { Average Inventory }}$
$=6$ times $=\frac{\text { Cost of Goods Sold }}{80,000}$
Cost of goods sold = 80,000 $\times$ 6 = 4,80,000
$=$ G. Profit $=4,80,000 \times \frac{25}{100}=1,20,000 $
Hence, the correct option is 1.
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