## (i) Cost of Revenue from Operations (Cost of Goods Sold) Rs. 2,20,000; Revenue from Operations (Net Sales) Rs. 3,20,000; Selling Expenses Rs. 12,000; Office Expenses Rs. 8,000; Depreciation Rs. 6,000. Calculate Operating Ratio. (ii) Revenue from Operations, Cash Sales Rs. 4,00,000; Credit Sales Rs. 1,00,000; Gross Profit Rs. 1,00,000; Office and Selling Expenses Rs. 50,000. Calculate Operating Ratio.

SOLUTION

Operation expenses = Selling expenses+ Office Expenses + Depreciation
26,000 = 12,000 + 8000 + 6,000

Cost of Goods Sold = 2,20,000
Operating Cost = Cost of Goods Sold + Operating Expenses
Operating Cost = 2,20,000 + 26,000
= 2,46,000

Sales = 3,20,000
Operating Ratio = Operating Cost / Net Sales ×100
= 2,46,000 / 3,20,000 × 100
= 76.875%

Net Sales = Cost of Goods sold + Gross Profit

= 4,00,000 + 1,00,000
= 5,00,000

Cost of Goods Sold = Net Sale – Gross Profit
= 5,00,000 – 1,00,000
= 4,00,000

Operating Expenses = Office and Selling Expenses = 50,000
Operating Cost = Cost of Goods Sold + Operating Cost
= 4,00,000 + 50,000

= 4,50,000

Operating Ratio = Operating Cost / Net Sales × 100
= 4,50,000 / 5,00,000 × 100
= 90%