Question

The cost of manufacturing a motorcycle for the Hero Honda company is Rs 30,000. The company sells its motorcycle to its distributors. The distributor sells it to a retailer who then sells it to a customer. If the profit made by each of them is Rs 5,000 and VAT is levied at 12%, find the total tax paid to the government and the amount paid by the customer for the motorcycle.

Answer 1

C.P. for the manufacturinq company =Rs 30,000 

S.P for the manufacturer= Rs (30,000 + 5,000) =Rs 35,000 

S.P. for distributor= Rs (35,000 + 5,000) =Rs 40,000 

S.P. for retailer = Rs ( 40,000 + 5,000) = Rs 45,000 

VAT charged by retailer= 12 %  of S.P. 

`= 12/100 xx  "Rs"  45000`

= Rs 5,400 

C.P. for the customer = S.P. +VAT

=Rs ( 45,000 + 5,400) 

= Rs 50,400 Tax received bv the qovernment (VAT) =Rs 5,400

Price paid by customer= Rs 50,400