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Question
From the following information, calculate Operating Ratio:
| Cost of Revenue | Revenue from Operation: | |||
| from Operations (Cost of Goods Sold) | ₹52,000 | Gross Sales | ₹ 88,000 | |
| Operating Expenses | ₹18,000 | Sales Return | ₹ 8,000 |
Solution
Net Sales = Gross Sales - Sales Return
= 88000 - 8000 = Rs 80000
Operating Cost = Cost of Goods Sold + Operating Expenses
= 52,000 + 18,000 = Rs 70,000
Operating Ratio =`"Operating Cost"/"Net Sales" xx 100`
`= 70000/80000 xx 100 = 87.5%`
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