Question

Operating Ratio 92%; Operating Expenses ₹94,000; Revenue from Operations ₹6,00,000; Sales Return ₹40,000. Calculate Cost of Revenue from Operations (Cost of Goods Sold).

Answer 1

Revenue from Operations (Net Sales) = Rs 600000

Operating Ratio = 92%

Operating Ratio= `"Operating Cost"/"Net Sales"xx 100`

`92 = "Operating Cost"/600000 xx 100`

Operating Cost =`(600000 xx 92)/100 = 552000`

Operating Cost = Cost of Goods Sold + Operating Expenses

5,52,000 = Cost of Goods Sold + 94,000

Cost of Goods Sold = Rs 4,58,000

*Note: Sales Return will not be considered since net sales are given which means sales return have already been adjusted in the sales figure.