Manufacturer A sells a washing machine to a trader B for Rs 12,500 Trader B sells it to a - Maths - Comparing Quantities

Question

Manufacturer A sells a washing machine to a trader B for
Rs 12,500 Trader B sells it to a trader C at a profit of Rs 800 and
trader C sells it to a customer at a profit of Rs 1,300 If the rate
of VAT is 8% , find:
i) the amount of VAT received by the state govt on the sale of
this machine,
ii) the amount that the consumer pays for the machine

Ankush Jain · Accepted Answer

Amount of tax collected by Manufacturer A = 8% of Rs 12500

$= \frac{8}{100} \times 12500 = Rs 1000$

Profit made by trader B = Rs 800

∴ profit made by trader B = value added by traders B = Rs 800

Amount VAT paid by trader B = 8% of Rs 800

$= \frac{8}{100} \times 800 = Rs 64$

Profit made by trader C = Rs 1300

∴ Value added by trader C = Rs 1300

Amount of VAT paid by trader C = 8% of Rs 1300

$= \frac{8}{100} \times 1300 = Rs 104$

(i) Amount of VAT received by the state govt on the sale of machine = Amount of tax collected by Manufacturer A +

Amount of VAT paid by trader B + Amount of VAT paid by trader C

= Rs (1000 + 64 + 104) = Rs 1168

(ii) Amount that the consumer pays for the machine (including)

= Price charged by manufacturer A + Profit of trader B + Profit of trader C

= Rs (12500 + 800 + 1300) = Rs 14600

∴ Tax paid by consumer = 8% of Rs 14600

$= \frac{8}{100} \times 14600 = Rs 1168$

∴ Amount paid by consumer (including VAT)

= Rs 14600 + Rs 1168

= Rs 15768

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