**SOLUTION**

**Gross Profit 25% on Cost.****Let Cost = xGross Profit = x × 25 / 100= 25x / 100**

** ****Sales = Cost + Gross Profit4,00,000 = x+ 25x / 100Or, 4,00,000 = 125x / 100Or, x = 4,00,000 × 100 / 125= 3,20,000**

**Cost = x = Rs. 3,20,000**

**Gross profit = Sales – Cost**

**Gross profit ratio = Gross profit / Net Sales × 100**

**= 80,000 × 100 / 4,00,000**

= 20%

= 20%