Question

If gross profit ratio is $25\%$ on cost, it is _________ $\%$ on sales.

• A. $33.33\%$
• B. $20\%$
• C. $25\%$
• D. $50\%$

Answer 1

Answer: (B)

$20\%$

Cost + Gross profit = Sales

Let cost = $100$ and Gross profit ratio = $25\%$ on cost

Therefore Gross profit = $25\%$ x $100$ = $25$

So, $100+25$ = Sales

Sales = $125$

Gross profit as percentage on sales = [Gross profit/Sales] x $100$

= [$25/125$] x $100$

= $20\%$.