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Gross Profit Ratio

If selling pr...

Question

If selling price is fixed 25% above the cost, the Gross Profit ratio is ___

A

13%

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B

28%

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C

26%

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D

20%

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Solution

The correct option is D
20%

Let cost = x
Then, revenue from operations = 1.25 x

Profit = 0.25 x

Gross profit ratio = $\frac{0.25 x}{1.25 x} \times 100 = 20 %$

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