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Question :

Calculate Operating ratio - 

Particulars

Amount

Revenue from Operations

600000

Gross profit

20%

Office Expense

30000

Selling Expense

48000

 

Option 1: 80%

Option 2: 95.33%

Option 3: 85%

Option 4: 93%


Team Careers360 23rd Jan, 2024
Answer (1)
Team Careers360 24th Jan, 2024

Correct Answer: 93%


Solution : The operating ratio is calculated by dividing a company's total operating costs by its net sales.

Hence the operating ratio is - 

Company total operating cost = Office exp. + Selling Exp. + Cost of goods sold

                                                    = Rs.[30000 + 48000 + 480000 (600000 - 20%)]

                                                     = Rs.558000

Total revenue from  operation = Rs.600000

= Rs.558000/Rs.600000

= 93%

Hence the correct answer is option 4.

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