On the basis of following data the cost of revenue from operations by a company will be Opening Inve...........

On the basis of following data, the cost of revenue from operations by a company will be :

Opening Inventory Rs70,000; Closing Inventory Rs80,000; Inventory Turnover Ratio 6 Times.

Rs1,50,000

Rs90,000

Rs4,50,000

Rs4,80,000

- The Inventory Turnover Ratio formula is: Cost of Revenue from Operations / Average Inventory.

- The average inventory is calculated as: (Opening Inventory + Closing Inventory) / 2.

- Here, the average inventory is: (Rs70,000 + Rs80,000) / 2 = Rs75,000.

- Given the Inventory Turnover Ratio is 6 times, we use the formula:

\text{Cost of Revenue from Operations} = \text{Inventory Turnover Ratio} \times \text{Average Inventory} = 6 \times Rs75,000 = Rs4,50,000.

- Option 1: Rs1,50,000 – Too low.

- Option 2: Rs90,000 – Too low.

- Option 3: Rs4,50,000 – Correct!

- Option 4: Rs4,80,000 – Too high.

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