A manufacturer lists the price of the goods at Rs.240
per article. The wholesaler ge6ts a discount of 25%
on the goods from the manufacturer.
The retailers are allowed a discount of 15% on
the list price by the wholesaler. The prescribe rate of sale tax
at all stages is 8%. A customer buys an article from the reatailer
at the listed price. Find the Value added tax paid by the retailer & wholesaler
I noticed that you posted this question several times and nobody has answered it. That is probably due to the fact that we are not familiar with VAT.
I will give it a shot.
list price by manufacturer = Rs 240
wholesaler gets 25% discount, so he pays
Rs 180
question: does VAT get added here ?
if so, there would be tax paid on tax already added at the end.
without VAT added at this stage, the retailer discounts the RS 180 by 15% , thus list price by retailer is .85(180) = RS 153
This makes no sense to me.
Where does the wholesaler make his profit?
Isn't he taking a loss ???
I think this question needs more clarification.
To find the value-added tax (VAT) paid by the retailer and wholesaler, we first need to calculate the selling price at each stage of the supply chain. Here's how we can calculate it step by step:
1. Manufacturer's Price:
The manufacturer lists the price of the goods at Rs. 240 per article.
2. Wholesaler's Price:
The wholesaler gets a discount of 25% on the goods from the manufacturer. So, the wholesaler's price will be 75% of the manufacturer's price.
Wholesaler's Price = Manufacturer's Price - (Discount Percentage * Manufacturer's Price)
Wholesaler's Price = Rs. 240 - (0.25 * Rs. 240)
Wholesaler's Price = Rs. 240 - Rs. 60
Wholesaler's Price = Rs. 180 per article
3. Retailer's Price:
The retailer is allowed a discount of 15% on the wholesaler's price. So, the retailer's price will be 85% of the wholesaler's price.
Retailer's Price = Wholesaler's Price - (Discount Percentage * Wholesaler's Price)
Retailer's Price = Rs. 180 - (0.15 * Rs. 180)
Retailer's Price = Rs. 180 - Rs. 27
Retailer's Price = Rs. 153 per article
Now, we can calculate the VAT paid by the retailer and wholesaler at the prescribed rate of 8%.
VAT Paid by the Wholesaler:
VAT Paid by the Wholesaler = VAT Rate * Wholesaler's Price
VAT Paid by the Wholesaler = 0.08 * Rs. 180
VAT Paid by the Wholesaler = Rs. 14.40
VAT Paid by the Retailer:
VAT Paid by the Retailer = VAT Rate * Retailer's Price
VAT Paid by the Retailer = 0.08 * Rs. 153
VAT Paid by the Retailer = Rs. 12.24
Therefore, the value-added tax paid by the wholesaler is Rs. 14.40 and the value-added tax paid by the retailer is Rs. 12.24.