Question

REVENUE FROM OPERATIONS RS 900000, GROSS PROFIT 25% ON COST, OPERATING EXPENSES RS 90000, OPERATING RATIO WILL BE

2 points

100%

50%

90%

10%

​

Answer 1

Answer:

let cost be 100

then gp is 25%of cost ie 25%of 100 ie 25

selling price 125

if selling price is 125 cost 100

if selling price is 1 cost 100/125

if selling price or we can say revenue from operations is rs 900000 then cost is 100/125*900000

=720000

operating ratio=(cost of goods sold+operating expenses)/revenue from operations*100

(720000+90000)/900000*100

(810000/900000)*100

90%

Explanation:

Accordingly option c is correct

Hope it helps you

Regards

Answer 2

Explanation:

Solution :

★ Operating Ratio =

$\tt{\dfrac{Cost\:of\:Revenue\:from\:Operations \: + \: Operating \: Expenses}{Revenue\:from\:Operations}\times 100}$

Gross Profit = 25% On Cost

Revenue from Operations = Cost of Revenue from Operations + Gross Profit

Let,

Cost of Revenue from Operations = x

⇒ 9,00,000 = x + 25% of x

⇒ 9,00,000 = x + 0.25x

⇒ 9,00,000 = 1.25x

⇒ x = 9,00,000/1.25

⇒ x = 7,20,000

Cost of Revenue from Operations = Rs. 7,20,000

★ Operating Ratio =

$\tt{\dfrac{Cost\:of\:Revenue\:from\:Operations \: + \: Operating \: Expenses}{Revenue\:from\:Operations}\times 100}$

$\tt{\longrightarrow \: \dfrac{7,20,000 \: + \: 90,000}{ 9,00,000} \times 100}$

$\tt{\longrightarrow \: 90\%}$

Operating Ratio = 90%

Therefore, Option 90%

Operating Ratio will be 90%