Question

opening inventory 60000,closing inventory 100000, inventory turnover ratio 8 times,selling price 25% above cost. Calculate gross profit ratio.

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Answer 1

Answer:

Gross profit ratio = 20%

Explanation:

Inventory turnover ratio = 8 times.

Average Inventory =

₹60,000+₹1,00,000/2

₹80,000

Accordingly,

Cost of goods sold/₹80,000 = 8

Or, Cost of goods sold = ₹6,40,000

Net Sales = ₹6,40,000 × 125/100

= ₹8,00,000

So, Gross profit = ₹8,00,000 - ₹6,40,000

= ₹1,60,000

Gross Profit Ratio = ₹1,60,000/₹8,00,000×100

20%

I hope that it will help :)

Answer 2

Answer:

Explanation:

Inventory Turnover Ratio = 8 times

★ Inventory Turnover Ratio :

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

$\sf{\longrightarrow{\dfrac{Cost \: of \: Goods \: Sold \: }{ \frac{Ope.ning \: Inventory \: + \: Closing \: Inventory}{2}}}}$

$\sf{\longrightarrow \: 8 \: = \: {\dfrac{Cost \: of \: Goods \: Sold \: }{ \frac{60,000\: + \: 1,00,000}{2}}}}$

$\sf{\longrightarrow \: 8 \: = \: {\dfrac{Cost \: of \: Goods \: Sold \: }{ \frac{1,60,000}{2}}}}$

$\sf{\longrightarrow \: 8 \: = \: {\dfrac{Cost \: of \: Goods \: Sold}{80,000}}}$

Average Inventory = 80,000

• Cost of Goods Sold = 80,000 × 8

= 6,40,000

Cost of Goods Sold = 6,40,000

Selling price 25% above Cost.

Selling price = [6,40,000 × (25/100)] + 6,40,000

= 1,60,000 + 6,40,000

= 8,00,000

Selling price = 8,00,000

• Gross Profit = Net Sales - Cost of Goods Sold

= 8,00,000 - 6,40,000

= 1,60,000

Gross Profit = 1,60,000

★ Gross Profit Ratio = (Gross Profit/Net Sales) × 100

= (1,60,000/8,00,000) × 100

= 20%

Gross Profit Ratio = 20%

Therefore, Gross Profit Ratio = 20%.