Question

A wholesaler buys a TV from the manufacturer for Rs. 25,000. He marks the price of TV 20% above his cost price and sells it to a retailer at a 10% discount on the market price. If the rate of the VAT is 8%, find the :

1) Market price

2) Retailer’s cost price inclusive of tax.

3) VAT paid by the wholesaler.

Answer 1

1) The selling price of the manufacturer = Rs. 25000

Marked price of the wholesaler

`= 25000 + 20/100 xx 25000`

= 25000 + 5000

= Rs 30000

2) For retailer,

C.P. Marked price - Discount

= Rs 30000 - 10% of Rs 30000

= Rs 30000 - `10/100 xx Rs 30000`

= Rs 30000 - Rs 3000

= Rs 27,000

Now C.P inclusive of tax =  Rs 27000 + 8% of Rs 27000

`= Rs 27000 + 8/100 xx Rs 27000`

= Rs 27000 + Rs 2160

= Rs 29160

3) For wholesaler

C.P = Rs 25000

S.P = Rs 27000

Profit = S.P. - C.P.  = Rs (27000 - 25000) =  Rs 2000

VAT paid by wholesale = `8/100  xx Rs  2000  = Rs 160`