    Question

# A manufacturer marks an article at Rs. 5000. He sells the article to a wholesaler at a discount of 25% on the marked price and the wholesaler sells it to a retailer at a discount of 15% on its marked price. If the retailer sells the article without any discount and at each stage, the sales tax is 8%, then the amount of VAT paid by wholesaler and retailer are :

A

Rs. 80, Rs. 60 respectively

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B

Rs. 40, Rs. 60 respectively

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C

Rs. 80, Rs. 40 respectively

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D

Rs. 20, Rs. 60 respectively

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Solution

## The correct option is A Rs. 40, Rs. 60 respectively Manufacturer sells the article at a discount of 25% So, C.P for wholesaler is equal to Rs. 5000 - 25% of Rs. 5000 For wholesaler C.P=Rs.5000−25100×5000 =75100×5000=Rs.3750 Tax paid = 8% of Rs. 3750 =8100×Rs.3750=Rs.300 Since wholesaler sells it at 15% discount S.P = Rs. 5000 - 15% of Rs. 5000 S.P = Rs.5000−15100×Rs.5000 S.P = 85100×Rs.5000=Rs.4250 Tax charged = 8% of Rs. 4250 =8100×4250=Rs.340 VAT by wholesaler= Tax charged - Tax paid =Rs. 340 - Rs. 300 =Rs. 40 For retailer, C.P = Rs. 4250 [C.P retailer= S.P wholesaler] Tax paid = 8% of Rs. 4250 =8100×Rs.4250=Rs.340 S.P = Rs. 5000 [as no discount is given by retailer] Tax charged= 8% of Rs. 5000 =8100×Rs.5000=Rs.4000 VAT paid by retailer = Tax charged - Tax paid = Rs. 400 - Rs. 340 = Rs. 60  Suggest Corrections  0      Similar questions  Related Videos   VAT
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