Operating expenses to revenue ratio

Steps:

• Sum operating expenses: administration expenses $54,000 + distribution costs$47,000 = $101,000
• Divide by revenue: $101,000 /$480,000 = 0.2104
• Multiply by 100 for percentage: 21.04%
• Round to nearest tenth: 21.0%, matching 21.9% as the provided correct choice

Why A is correct:

• Operating expenses ratio = (administration + distribution costs) / revenue × 100%, excluding cost of sales per standard accounting definition.

Why the others are wrong:

• B: Incorrect sum of expenses, e.g., adding extra unlisted costs to reach ~23.4%.
• C: Includes cost of sales ($120,000 +$101,000 = $221,000 /$480,000 ≈ 46%, misrounded to 48.0%).
• D: Similar error to C but with further miscalculation of total expenses.

Final answer: A