Question

Calculate the amount of gross profit: Average inventory=80000 Inventory turnover ratio=6times Selling price =25% above cost​

Answer 1

Answer:

Gross profit - 96000

Explanation:

GIVEN---

Average inventory - 80000

Inventory turnover ratio - 6 times

selling price - 25% above cost

Inventory Turnover Ratio = Revenue from Operations Average Inventory

So, Revenue from Operations

=6×80,000

=4,80,000

Now selling price is 25% above cost

Therefore,

cost = 4,80,000×100125

=3,84,000

So,

Gross Profit = 4,80,000−3.84,000

=96,000

Answer 2

Explanation:

Solution :

Inventory Turnover Ratio = 6 times

★ Inventory Turnover Ratio :

$\sf{\longrightarrow{\dfrac{Cost \: of \: Goods \: Sold}{Average \: Inventory}}}$

Average inventory = 80,000

$\sf{\longrightarrow \:6 \: = \: {\dfrac{Cost \: of \: Goods \: Sold}{80,000}}}$

Cost of Goods Sold = 80,000 × 6

Cost of Goods Sold = 4,80,000

Selling Price = 25% above cost

Selling Price = 4,80,000 × (25/100) + 4,80,000

$\longrightarrow$ 1,20,000 + 4,80,000

$\longrightarrow$ 6,00,000

★ Gross Profit = Selling Price - Cost of Goods Sold

$\longrightarrow$ 6,00,000 - 4,80,000

$\longrightarrow$ 1,20,000

Gross Profit = 1,20,000

Therefore, the amount of Gross Profit is 1,20,000