Question

Opening Inventory ₹ 75,000; Closing Inventory ₹ 1,05,000; Inventory Turnover Ratio 6; Gross Profit 20% on cost; what will be Gross Profit?

विकल्प

• ₹ 1,35,000

• ₹ 1,08,000

• ₹ 90,000

• ₹ 18,000

Answer 1

₹ 1,08,000

Explanation:

Average Inventory = `("Opening Inventory" + "Closing Inventory")/2`

= `(75,000 + 1,05,000)/2`

= `(1,80,000)/2`

= ₹ 90,000

Inventory Turnover Ratio = `"Cost of Revenue from operation"/"Average Inventory"`

6 = `("Cost of Revenue from operation")/(90,000)`

Cost of Revenue from operation = 90,000 × 6

= ₹ 5,40,000

Gross profit = 20% of Cost 

= `20/100 xx 5,40,000`

= ₹ 1,08,000