Question

Calculate Cost of Revenue from Operations from the following information:
Revenue from Operations ₹ 12,00,000; Operating Ratio 75%; Operating Expenses ₹ 1,00,000.

Answer 1

$$\begin{gathered} \mathit{G}\mathit{i}\mathit{v}\mathit{e}\mathit{n}: \\ \mathrm{Revenue}\mathrm{from}\mathrm{Operations}(\mathrm{Net}\mathrm{Sales})=\mathrm{Rs}12,00,000 \\ \mathrm{Operating}\mathrm{Ratio}=75\% \\ \mathrm{Operating}\mathrm{Expenses}=\mathrm{Rs}1,00,000 \\ \mathit{F}\mathit{i}\mathit{n}\mathit{d}\mathit{}\mathit{o}\mathit{u}\mathit{t}:\mathrm{Cost}\mathrm{of}\mathrm{Revenue}\mathrm{from}\mathrm{Operations} \\ \mathrm{Operating}\mathrm{Ratio}=\frac{\mathrm{Operating}\mathrm{Cost}}{\mathrm{Net}\mathrm{Sales}}\times 100 \\ 0.75=\frac{\mathrm{Operating}\mathrm{Cost}}{12,00,000} \\ \mathrm{Operating}\mathrm{Cost}=\mathrm{Rs}9,00,000 \\ \mathrm{Operating}\mathrm{Cost}=\mathrm{Cost}\mathrm{of}\mathrm{Revenue}\mathrm{from}\mathrm{Operations}+\mathrm{Operating}\mathrm{Expenses} \\ 9,00,000=\mathrm{Cost}\mathrm{of}\mathrm{Revenue}\mathrm{from}\mathrm{Operations}+1,00,000 \\ \mathrm{Cost}\mathrm{of}\mathrm{Revenue}\mathrm{from}\mathrm{Operations}=\mathrm{Rs}8,00,000 \end{gathered}$$