Given:
- Cost of goods = Rs. 80,000
- Profit = 20% on sales
When profit is stated as a percentage on sales, it means profit is calculated as a percentage of the selling price (not on cost).
Let Sales Value = S
The relationship can be expressed as:
Profit=20% of S=0.20S
Also, we know:
Sales=Cost+Profit
Substituting the values:
S=80,000+0.20S
S−0.20S=80,000
\0.80S = 80,000S = \frac{80,000}{0.80} = 1,00,000$
Therefore, Gross Profit = Sales - Cost = 1,00,000 - 80,000 = Rs. 20,000
Verification: Profit as percentage of sales = 1,00,00020,000×100=20% ✓
The correct answer is Option 3: Rs. 20,000/-