Riaz holds an average inventory of 36,000(CP) with an inventory turnover of 5 times. If the firm makes a gross profit of 25% on sales, find the total sales of the company.
Correct answer: A. 2,40,000
- A. 2,40,000
- B. 2,10,000
- C. 2,00,000
- D. 1,80,000
Explanation
Inventory turnover gives cost of goods sold: 36,000 × 5 = 180,000. A 25% gross profit on sales means cost is 75% of sales, so sales = 180,000 ÷ 0.75 = 240,000.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
Practise Cost Accounting
941 free Cost Accounting MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Cost Accounting questions
When production is equal to sales, which of the following is TRUE?
An average cost is also known as________?
Costs that change in response to alternative courses of action are called___________?
_________is the cost of converting raw material into finished products?
Period cost include which of the following ?
Cost of goods sold excludes___________?