What is the percentage of cost of materi

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Target Exam

CUET

Subject

Accountancy

Chapter

Analysis of Financial Statements

Question:

From the books of ABCD Ltd. prepare common size statements and answer the following questions.

What is the percentage of cost of materials consumed in the year 2022?

Options:

60%

50%

55%

40%

Correct Answer:

55%

Explanation:

PARTICULARS	2021 (ABSOLUTE AMT)	2022 (ABSOLUTE AMT)	2021 (PERCENTAGE OF REVENUE FROM OPERATIONS)	2022 (PERCENTAGE OF REVENUE FROM OPERATIONS)
I Revenue from operations	1000000	1200000	100	100
Less: Expenses a) Cost of materials consumed	600000	660000	60	55
b) Employee benefit expenses	120000	120000	12	10
c) Other expenses	50000	96000	5	8
II Total expenses (a+b+c)	770000	876000	77	73
Profit before tax (I-II)	230000	324000	23	27

Cost of material consumed % in 2022 = Cost of materials consumed/ Revenue from operations X 100
= 660000/1200000 x 100
= 55%