Question

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

1) Marked price.

2) Retailer's cost price inclusive of tax

3) VAT paid by the wholesaler.

 

Answer 1

1)Marked price = Rs 25000 + 20% of Rs 25000

`= 25000 + 20/100 xx 25000`

= 25000 + 5000

= Rs 30000

2) For retailer:

C.P =Marked price - Discount

`= 30000 - 10/100 xx 30000`

= 30000 - 3000

= Rs 27000

Tax on it 8% of  27000 = `8/100 xx 27000 = Rs 2160`

∴ C.P indusive tax = Rs 27000 + Rs 2160 = Rs 29160

3) VAT paid by the wholesaler = Tax on S.P - Tax on C.P

`= 8/100 xx 27000 - 8/100 xx 25000`

`= 8/100 xx 2000`

= Rs 160