Question : Revenue from operations Rs. 6,80,000; Rate of Gross Profit on cost 25%; Selling expenses Rs. 1,44,000; Administrative expenses Rs. 73,000. The operating ratio will be
Option 1: 111.91%
Option 2: 100%
Option 3: 111%
Option 4: None of the above
Answer (1)
15th Jan, 2024
Correct Answer: 111.91%
Solution :
Answer = 111.91%
Op. ratio= $\frac{COGS+op.exp}{\text{Net sales}}$×100
⇒ $\frac{5,44,000+1,44,000+73,000}{6,80,000}$×100
⇒ $\frac{7,61,000}{6,80,000}$= 111.91%.
COGS+G.P= Net sales.
⇒ x+$\frac{x}{4}$=6,80,000
⇒ $\frac{5x}{4}$= 6,80,000
⇒ x= 6,80,000×$\frac{4}{5}$
⇒ 1,36,000×4= 5,44,000.
G.P= 1,36,000
COGS= 5,44,000
Hence, the correct option is 1.
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