On the basis of following data, the cost of revenue from operations by a company will be :Opening Inventory Rs70,000; Closing Inventory Rs80,000; Inventory Turnover Ratio 6 Times.
Answer & explanation
Correct answer: option 3
Opening Inventory Rs70,000 & Closing Inventory Rs80,000 and Inventory Turnover Ratio 6 Times.
Average Inventory= (Opening Inventory & Closing Inventory) /2
= (Rs70,000 +Rs80,000)/2
= 75,000
Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory
6 = Cost of Revenue/75,000
Cost of revenue from operations = 75000 x 6
= 4,50,000