SOLUTION
Operation expenses = Selling expenses+ Office Expenses + Depreciation
26,000 = 12,000 + 8000 + 6,000
Cost of Goods Sold = 2,20,000
Operating Cost = Cost of Goods Sold + Operating Expenses
Operating Cost = 2,20,000 + 26,000
= 2,46,000
Sales = 3,20,000
Operating Ratio = Operating Cost / Net Sales ×100
= 2,46,000 / 3,20,000 × 100
= 76.875%
Net Sales = Cost of Goods sold + Gross Profit
= 4,00,000 + 1,00,000
= 5,00,000
Cost of Goods Sold = Net Sale – Gross Profit
= 5,00,000 – 1,00,000
= 4,00,000
Operating Expenses = Office and Selling Expenses = 50,000
Operating Cost = Cost of Goods Sold + Operating Cost
= 4,00,000 + 50,000
= 4,50,000
Operating Ratio = Operating Cost / Net Sales × 100
= 4,50,000 / 5,00,000 × 100
= 90%