Question

A company sells an article to a dealer for 40,500 including VAT (sales-tax). The dealer sells it to some other dealer for 42,500 plus tax. The second dealer sells it to a customer at a profit of 3,000. If the rate of sales-tax under VAT is 8%, find :

1) The cost of the article (excluding tax) to the first dealer.

2) The total tax (under VAT) received by the Government.

3) The amount that a customer pays for the article.

Answer 1

1) Let the cost price of an article (excluding tax) to the first dealer be Rs x

Now CP. of an article to a dealer including tax (8%) = Rs 40500

=> x + 8% x X = 40500

`=> 108/100 x = 40500`

`=> x = 37500`

Thus the cost of an article to the first dealer is Rs 37500

2) Now tax received by Government

= 8% of Rs (42500 - 3000)

= 8% of Rs  45500

`= 8/100 xx Rs 45500 `

=Rs 3640

3) The amount thata customer pays for the article

= Rs (42500 + 3000 + 3640)

= Rs 49140