A manufacturer buys a raw materials for Rs. 3000 and pays 4% tax. He sells the ready stock for Rs. 5000 and charges 4% tax. Find the VAT paid by the manufacturer.

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Solution

The correct option is C 80
Cost price of the raw material = Rs. 3000
Selling price of the raw material = Rs. 5000
Value added by the manufacturer = 5000 - 3000 = Rs. 2000
Rate of VAT = 4%
VAT paid by the manufacturer = 4% of Rs. 2000 = $\frac{4}{100} \times 2000 = 80$

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A manufacturer buys a raw materials for Rs. 3000 and pays 4% tax. He sells the ready stock for Rs. 5000 and charges 4% tax. Find the VAT paid by the manufacturer.

The correct option is C 80Cost price of the raw material = Rs. 3000Selling price of the raw material = Rs. 5000Value added by the manufacturer = 5000 - 3000 = Rs. 2000Rate of VAT = 4%VAT paid by the manufacturer = 4% of Rs. 2000 = 4100×2000=80

The correct option is C 80
Cost price of the raw material = Rs. 3000
Selling price of the raw material = Rs. 5000
Value added by the manufacturer = 5000 - 3000 = Rs. 2000
Rate of VAT = 4%
VAT paid by the manufacturer = 4% of Rs. 2000 = $\frac{4}{100} \times 2000 = 80$