Question

Revenue from operations ₹ 8,00,000; Gross profit ratio 32%; Indirect Exp. 10% of Gross profit and income tax 40%. What will be the amount of profit after tax?

Options

• ₹ 1,38,240

• ₹ 1,02,400

• ₹ 92,160

• 1,53,600

Answer 1

₹ 1,38,240

Explanation:

Given:

Revenue from operations = ₹ 8,00,000

Gross profit ratio = 32%

Indirect expenses = 10% of gross profit

Income tax = 40%

1. Gross Profit = 32% of ₹ 8,00,000 = ₹ 2,56,000

2. Indirect Expenses = 10% of ₹ 2,56,000 = ₹ 25,600

3. Profit before tax = Gross Profit - Indirect Expenses

= ₹ 2,56,000 − ₹ 25,600

= ₹ 2,30,400

4. Income tax = 40% of ₹ 2,30,400 = ₹ 92,160

5. Profit after tax = Profit before tax - Income tax

= ₹ 2,30,400 − ₹ 92,160

= ₹ 1,38,240