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Calculation of Sales Ratio

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Sales ratio is very important in allocation of gross profit and other related expenses for finding profit prior to incorporation. If total sale is almost equal in each month, then there is no difficulty to find it but if sale of some months is very high than any other month, then at that time we calculate average sale by dividing total sale with 12 and then we find each month's sale. Only after this, total sale of prior to incorporation and after to incorporation will be calculated and then we make sale ratio

For Example - Delhi company incorporated on 1st April 2009, took over running business from 1st Jan., 2009. The company prepares its first final accounts on 31st Dec. 2009. From the following information, you are required to calculate the sales ratio of pre-incorporation period.

a) Sales for Jan. 2009 to Dec. 2009 is Rs 480000, b) The sales for the month Jan. twice of the average sales for the month of Feb. equal to average sales, sales for four months may to Aug. - 1/4 of the average of each month  ; and sales for Oct. and Nov. three times of average sales.

Solution : Calculation of average sales per month = 1480000/12 = Rs. 40,000

Sales for the month of Jan ( 2 X 40000) = 80,000
Sales for the month of Feb. ( 1 X 40000) = 40000
sales for

May to Aug ( 4 X  1/4 X 40000 )= 40,000

Sales for Oct (  3 X 40000 ) = 120000
Sales for Nov. ( 3 X 40000) = 120000
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Total sales of above months = 400000
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Sales of remaining months = 480,000 - 4,00,000 = Rs. 80,000

Average sales of remaining month = 80,000 / 4 = 20,000

Sales of pre-incorporation period

Jan. = 80000
Feb = 40000
March = 20000

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Total sales pre-incorporation = 140000
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Sales for post -incorporation period = 480000 - 140000 = 340000

Sales Ratio of Pre- incorporation to post incorporation period = 140000 : 340000

= 7:17

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Accounting Education: Calculation of Sales Ratio
Calculation of Sales Ratio
Accounting Education
https://www.svtuition.org/2010/10/calculation-of-sales-ratio.html
https://www.svtuition.org/
https://www.svtuition.org/
https://www.svtuition.org/2010/10/calculation-of-sales-ratio.html
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