Question

A company earns a gross profit of 20% on cost. Its credit sales are twice its cash sales. If the credit sales are Rs. 4,00,000, Calculate the gross profit of the company.

Answer 1

Credit sales 4000,000

Cash sales (1/2 of credit sales) = 200,000

Total sales 600,000

We know that 20% of cost = 16.67% of sales

Gross profit \( = \frac{600,000\times 16.67}{100} = 100,020\)