Question

Revenue from operations ₹ 4,00,000; Cost of revenue from operations 60% of revenue from operations; Operating expenses ₹ 30,000 and Rate of income tax is 40%. What will be amount of profit after tax?

Options

• ₹ 64,000

• ₹ 78,000

• ₹ 52,000

• ₹ 96,000

Answer 1

₹ 78,000

Explanation:

Given: 

Revenue from operations = ₹ 4,00,000

Cost of revenue from operations = 60% of revenue from operations = `4,00,000 × 60/100` = ₹ 2,40,000

Operating expenses = ₹ 30,000

Tax rate = 40%

1. Calculate profit before tax:

Profit before tax = Revenue − Cost of revenue − Operating expenses

= 4,00,000 − 2,40,000 − 30,000

= ₹1,30,000

2. Calculate tax:

Tax = 40% of profit before tax = `1,30,000 xx 40/100` = ₹ 52,000

3. Calculate profit after tax:

Profit after tax = Profit before tax − Tax

= 1,30,000 − 52,000

= ₹ 78,000