What will be the amount of Gross Profit if revenue from operations are Rs6 00 000 and Gross Profit R...........

What will be the amount of Gross Profit. if revenue from operations are Rs6,00,000 and Gross . Profit Ratio is 20% of cost?

Rs1,50,000

Rs1,00,000

Rs1,20,000

Rs5,00,000

- The Gross Profit Ratio is 20% of cost, not of revenue.

- Gross Profit is calculated as: Gross Profit = Revenue - Cost.

- Let's denote Cost as C. The gross profit ratio given is 20% of Cost. This means Gross Profit = 0.2 × C.

- Given Revenue = Rs6,00,000.

Revenue = Gross Profit + Cost. Substitute the relations we have:

-Rs6,00,000 = C+ 0.2 C

C = 6,00,000/1.2 = 5,00,000

GP = 6,00,000 - 5,00,000 = Rs 1,00,000

Alternatrively

Gross Profit = Sales X Profit% /(100 + Profit%)

Gross Profit = 6,00,000 X 20/120= Rs 1,00,000

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