Question

If the rate of gross profit is $20\%$ on the cost of goods sold and the sales are Rs.1,50,000, then the total gross profit would be__________.

• A. Rs.25,000
• B. Rs.30,000
• C. Rs.37,500
• D. None of these

Answer 1

Answer: (A)

Rs.25,000

Gross Profit is calculated by the below equation:

Gross Profit = Sales - Cost of goods sold

In the given situation, gross profit is 20% on the cost of goods sold.

Hence, assume cost of goods sold is 100, than the sales will be Rs.100+ Rs.20 i.e. Rs.120

Accordingly

Cost of goods sold will be = Rs.150000 * 100

120

Cost of goods sold = Rs. 125000

Therefore Gross Profit = Cost of Goods sold * 20%

Gross Profit = Rs.125000 * 20%

Gross Profit = Rs.25000