Calculate amount of Profit after Tax if, Revenue from operation ₹4,00,000; Cost of Revenue from Operations is 20% of Revenue from operations. Tax rate @ 50%.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹1,60,000
Profit after tax is the profit left after the cost of revenue from operations and then tax are taken out.
Cost of revenue from operations = 20% of ₹4,00,000 = ₹80,000
Profit before tax = ₹4,00,000 − ₹80,000 = ₹3,20,000
Tax @ 50% = ₹1,60,000
Profit after tax = ₹3,20,000 − ₹1,60,000 = ₹1,60,000
₹3,20,000 is the profit before tax; ₹2,00,000 takes 50% of the revenue instead of the profit.