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    Question

    Refer to the following information to answer the next 4 questions (Q5 to Q8)  

      From the above information, calculate the operating ratio.

    A 31.0 % Correct Answer Incorrect Answer
    B 69.0% Correct Answer Incorrect Answer
    C 80.2% Correct Answer Incorrect Answer
    D 82.6% Correct Answer Incorrect Answer
    E 84.7% Correct Answer Incorrect Answer

    Solution

    Operating ratio = (Cost of goods sold + operating expenses) / sales *100                         Cost of goods sold (COGS) = opening stock + purchases + carriage and freight + wages – closing stock = 76,250 + 315,250 + 2000 + 5000 – 98,500 = 3,00,000   Operating expenses = admin expenses + selling and dist. Expenses                                     = 1,01,000 + 12,000                                     = 1,13,000   Operating ratio = (3,00,000 + 1,13,000) / 5,00,000 *100                         = 82.6%

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