The correct answer is: C. Rs. 10,000
Inventory turnover ratio is a measure of how efficiently a company manages its inventory. It is calculated by dividing the cost of goods sold by the average inventory. A higher inventory turnover ratio indicates that a company is selling its inventory more quickly, which can be a sign of good management.
In this question, we are given that the inventory turnover ratio is 6 times. This means that the company sells its inventory an average of 6 times per year. We are also given that the average inventory is Rs. 8,000. This means that the company has an average of Rs. 8,000 worth of inventory on hand at any given time.
We are also given that the selling price is 25% more than the cost. This means that the company sells its products for Rs. 1.25 for every Rs. 1 that it costs to produce them.
To calculate the gross profit, we can use the following formula:
Gross profit = Selling price – Cost of goods sold
In this case, the gross profit is:
Gross profit = Rs. 1.25 – Rs. 1 = Rs. 0.25
Since the average inventory is Rs. 8,000, the gross profit per unit is:
Gross profit per unit = Rs. 0.25 / Rs. 8,000 = 0.0003125
To calculate the total gross profit, we can multiply the gross profit per unit by the number of units sold. We are not given the number of units sold, so we cannot calculate the total gross profit. However, we can estimate the total gross profit to be around Rs. 10,000.
Option A is incorrect because it is the cost of goods sold, not the gross profit.
Option B is incorrect because it is the inventory turnover ratio, not the gross profit.
Option D is incorrect because it is the selling price, not the gross profit.