Question

Calculate cost of Revenue from Operations from the following information:

	₹
Operating Ratio	90%
Office Exp.	30,000
Selling Exp.	20,000
Revenue from Operations (Sales)	7,00,000
Revenue from Operations Return (Sales Returns)	40,000

Answer 1

Net Revenue from Operations = Revenue from Operations − Revenue from Operations Return

= ₹ 7,00,000 − ₹ 40,000

= ₹ 6,60,000

Operating Expenses = Office Exp. + Selling Exp.

= ₹ 30,000 + ₹ 20,000

= ₹ 50,000

Operating Ratio = `("Cost of Revenue from Operations + Operating Exp")/"Net Revenue from Operations" xx 100`

90 = `("Cost of Revenue from Operations" + 50,000)/(6,60,000) xx 100`

Cost of Revenue from Operations + ₹ 50,000 = `(90 xx 6,60,000)/100`

Cost of Revenue from Operations = ₹ 5,94,000 − ₹ 50,000

= ₹ 5,44,000