Question : Average Inventory Rs.95,000
Inventory Turnover Ratio 3 times
Gross Profit 25% of Revenue from Operations. Cost of revenue from operation will be
Option 1: Rs 3,00,000
Option 2: Rs 2,85,000
Option 3: Rs 2,00,000
Option 4: None of the above
Answer (1)
23rd Jan, 2024
Correct Answer: Rs 2,85,000
Solution : Answer = Rs 2,85,000
Inventory Turnover Ratio = $\frac{\text{Cost of Goods Sold}}{\text{Average Inventory}}
3 time $=\frac{\text {Cost of Goods sold }}{95000}$
$\Rightarrow$ Cost of Goods
$\begin{aligned}
\text { Sold } & =95000 \times 3 \\
& =285000
\end{aligned}$
Hence, the correct option is 2.
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