The correct answer is: C. Rs. 10,000
The stock turnover ratio is the number of times a company sells its inventory in a year. It is calculated by dividing the cost of goods sold by the average inventory. A higher stock turnover ratio indicates that a company is selling its inventory more quickly, which can be a sign of good management.
In this question, the stock turnover ratio is 6 times. This means that the company sells its inventory an average of 6 times per year. The average stock 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. The selling price is 25% above cost. This means that the company sells its products for 25% more than it costs to produce them.
To calculate the gross profit, we can use the following formula:
Gross profit = (Selling price – Cost) * Number of units sold
In this case, the number of units sold is equal to the average stock, which is Rs. 8,000. So, the gross profit is equal to:
Gross profit = (1.25 * Cost) * Rs. 8,000
= Rs. 10,000
Therefore, the amount of gross profit is Rs. 10,000.
Option A is incorrect because it is the cost of goods sold. Option B is incorrect because it is the average stock. Option D is incorrect because it is the selling price.