Calculate Cost of Revenue from Operations from the following information: Revenue from Operations Rs. 12,00,000; Operating Ratio 75%; Operating Expenses Rs. 1,00,000.

SOLUTION

Given: Revenue from Operations (Net Sales) = Rs. 12,00,000
Operating Ratio = 75%
Operating Expenses = Rs. 1,00,000
Find out: 
Cost of Revenue from Operations Operating Ratio = Operating Cost Net Sales × 1000 / 75
= Operating Cost / 12,00,000

Operating Cost = 9,00,000
Operating Cost = Cost of Revenue from Operations + Operating Expenses
9,00,000 = Cost of Revenue from Operations + 1,00,000
Cost of Revenue from Operations = Rs. 8,00,000

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