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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.
Solution
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`
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