Question 17 of 45intermediate🔧 ApplyNumerical2 marks

The total sales of a company (also called revenue) was ₹2.5 crore last year. They had a healthy profit margin of 25%. What was the total expenditure (costs) of the company last year?

Correct Answer

Given: Revenue = ₹2.5 crore Profit margin = 25%

Formula: Profit = 25% of Revenue Expenditure = Revenue - Profit

Calculation: Profit = 0.25×2.50.25 \times 2.5 = ₹0.625 crore Expenditure = 2.5 - 0.625 = ₹1.875 crore

Answer: Total expenditure = ₹1.875 crore.

Exercise: Figure it Out (Section 3) | Q: 3 | (Page Page 19)
For More Understanding

Explanation

The chapter explains that profit margin can be calculated on revenue. If profit margin is 25% of revenue, then costs are 75% of revenue.

Solution Steps

  1. Revenue = ₹2.5 crore

  2. Profit margin = 25% of revenue

  3. Profit = 0.25×2.50.25 \times 2.5 = ₹0.625 crore

  4. Expenditure = Revenue - Profit = 2.5 - 0.625 = ₹1.875 crore

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