{"id":51099,"date":"2024-04-15T23:19:53","date_gmt":"2024-04-15T23:19:53","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=51099"},"modified":"2024-04-15T23:19:53","modified_gmt":"2024-04-15T23:19:53","slug":"given-that-inventory-turnover-ratio-rs-6-time-average-inventory-rs-8000-selling-price-rs-25-more-then-the-cost-what-will-be-the-amount-of-gross-profit","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/given-that-inventory-turnover-ratio-rs-6-time-average-inventory-rs-8000-selling-price-rs-25-more-then-the-cost-what-will-be-the-amount-of-gross-profit\/","title":{"rendered":"Given that, Inventory turnover ratio = Rs. 6 Time Average inventory = Rs. 8,000 Selling price = Rs. 25% More then the cost. What will be the amount of gross profit?"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a9818cf867c9\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"false\">\r\n                    Rs. 20,000                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    Rs. 4,000                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"true\">\r\n                    Rs. 10,000                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"false\">\r\n                    Rs. 12,000                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: C. Rs. 10,000<\/p>\n<p>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.<\/p>\n<p>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.<\/p>\n<p>We are also given that the selling price is 25% <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> 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.<\/p>\n<p>To calculate the gross profit, we can use the following formula:<\/p>\n<p>Gross profit = Selling price &#8211; Cost of goods sold<\/p>\n<p>In this case, the gross profit is:<\/p>\n<p>Gross profit = Rs. 1.25 &#8211; Rs. 1 = Rs. 0.25<\/p>\n<p>Since the average inventory is Rs. 8,000, the gross profit per unit is:<\/p>\n<p>Gross profit per unit = Rs. 0.25 \/ Rs. 8,000 = 0.0003125<\/p>\n<p>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.<\/p>\n<p>Option A is incorrect because it is the cost of goods sold, <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> not the gross profit.<\/p>\n<p>Option B is incorrect because it is the inventory turnover ratio, not the gross profit.<\/p>\n<p>Option D is incorrect because it is the selling price, not the gross profit.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Given that, Inventory turnover ratio = Rs. 6 Time Average inventory = Rs. 8,000 Selling price = Rs. 25% More then the cost. 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