Question

A) Calculate Gross profit :
Particular
Opening Inventory
80,000
Closing Inventory
100 000
revenue from opreating
900.000
inventory turnover ratio
8 time.​

Answer 1

Explanation:

Inventory turnover ratio = COGS / Average Inventory

8 = COGS / Average Inventory

Average Inventory = Opening Inventory + Closing Inventory/2

= 80,000 + 1,00,000/2

= 1,80,000/2

= 90,000

Average Inventory = 90,000

Inventory turnover ratio = COGS / Average Inventory

8 = COGS / 90,000

COGS = 7,20,000

Gross profit = Net sales - COGS

Gross profit = 9,00,000 - 7,20,000

Gross profit = 1,80,000

Therefore, Gross profit = Rs. 1,80,000

Answer 2

Answer:

Gross Profit = Rs. 1,80,000

Explanation:

Given :

Opening Inventory = 80,000

Closing Inventory = 1,00,000

Revenue from opreatins = 9,00,000

inventory turnover ratio = 8 times

Gross profit = ??

Solution :

Gross Profit = Revenue from opreations - Cost of Revenue from opreations

Inventory Turnover Ratio :

$\sf{\longrightarrow{\dfrac{Cost \: of \: Revenue \: from \: opreations}{Average \: Inventory}}}$

$\sf{\longrightarrow{\dfrac{Cost \: of \: Revenue \: from \: opreations}{ \frac{Ope.ning \: Inventory \: + \: Closing \: Inventory}{2}}}}$

★ Average Inventory =

$\sf{\longrightarrow{\dfrac{Ope.ning \: Inventory \: + \: Closing \: Inventory}{2}}}$

$\sf{\longrightarrow{\dfrac{80,000 \: + \: 1,00,000}{2}}}$

$\longrightarrow \:90,000$

Average Inventory = 90,000

Inventory Turnover Ratio :

$\sf{\longrightarrow{\dfrac{Cost \: of \: Revenue \: from \: opreations}{Average \: Inventory}}}$

$\sf{\longrightarrow \: 8 \: = \: {\dfrac{Cost \: of \: Revenue \: from \: opreations}{90,000}}}$

Cost of Revenue from opreations = 90,000 × 8

Cost of Revenue from opreations = 7,20,000

Gross Profit = Revenue from opreations - Cost of Revenue from opreations

Gross Profit = 9,00,000 - 7,20,000

Gross Profit = 1,80,000

Therefore, Gross Profit = Rs. 1,80,000