Question

A manufacturer sells a microwave with a marked price of Rs 11,000 to the distributor for Rs 7,500. The distributor sells it to the retailer at a profit of Rs 1,500. The retailer sells to the customer at the marked price. If tax is charged at 8%, find the VAT paid by the retailer and the price paid by the customer.

Answer 1

Marked price of the microwave =Rs 11,000

C.P. for distributor= Rs 7,500 

For retailer:

C.P. for retailer= Rs (7,500 + 1,500) =Rs 9,000

Tax paid on C.P. = 8 % of C.P. 

= `8/100 xx  "Rs"  9000` 

= Rs 720

S.P. for retailer= marked price =Rs 11,000

Tax reoovered on S.P. = 8 % of S.P.

= `8/100 xx  "Rs"  11000`

= Rs 880

VAT paid by retailer = tax recovered on sale - tax paid on purchase 

=Rs (880 - 720) 

Hence, VAT paid = Rs 160 

Price paid by customer= Rs 11,000