Question : From the following information calculate the operating ratio.
Revenue from Operations: Rs.3,40,000
Cost of Revenue from Operations: Rs.1,80,000
Selling expenses: Rs.45,000
Administrative Expenses: Rs.30,000
Option 1: 75%
Option 2: 65%
Option 3: 55%
Option 4: 85%
Correct Answer: 75%
Solution :
Operating Cost = Cost of Revenue from Operations + Selling Expenses + Administrative Expenses
= Rs. 1,80,000 + 45,000 + 30,000 = Rs. 2,55,000
Operating Ratio = Operating Cost / Net Revenue from Operations × 100
= Rs. 2,55,000 / Rs. 3,40,000 x 100 = 75%
Hence option 1 is the correct answer.



