Operating Ratio 92%; Operating Expenses Rs 94,000

147 :- Operating Ratio 92%; Operating Expenses Rs 94,000; Revenue from Operations Rs 6,00,000; Sales Return Rs 40,000. Calculate Cost of Revenue from Operations (Cost of Goods Sold).

Solution :-

Let the Cost of Revenue from Operations be x
Operating Cost = Cost of Revenue from Operations + Operating Expenses
= x + 94,000

Operating Ratio = (Operating Cost/Revenue from Operations) x 100
92% = [(x + 94000)/6,00,000] x 100
(92 x 6,00,000)/100 = x + 94,000
5,52,000 = x + 94,000
x = Rs 5,52,000 – 94,000
x = Rs 4,58,000
Therefore, Cost of Revenue from Operations is Rs 4,58,000.