Question

A manufacturing company M sells a computer to a distributor for ₹ 33,000 including sales tax. The distributor D sells it to a retailer R for ₹ 35,000 excluding tax and the retailer sells it to a customer for ₹ 36,000 plus tax. If the rate of sales tax (under VAT ) is 10 % find

i) the cost price of the computer for the distributor

ii) the amount of tax (under VAT) paid by Retailer

• A. i) ₹ 32,000 ii) ₹ 3600
• B. i) ₹ 30,000 ii) ₹ 1000
• C. i) ₹ 29,000 ii) ₹ 3500
• D. i) ₹ 31,000 ii) ₹ 2500

Answer 1

The correct option is B

i) ₹ 30,000 ii) ₹ 1000

Let the cost price of the computer for the distributor be ₹ $x$
Rate of sales tax = 10 %
$\therefore$ Tax charged by Manufacturer = $x$ + $\frac{x}{10}$ = $\frac{11x}{10}$
Selling price of the Manufacturer = ₹ 33,000
$\therefore$ $\frac{11x}{10}$ = 33,000
$x$ = ₹ 30000

i) Hence the cost price for the Distributor = ₹ 30000
Selling Price of the Distributor = 35,000; Rate of sales Tax = 10 %
Tax collected by the Distributor = 10 % of 35,000
= $\frac{10}{100}\times$ 35000
= ₹ 3500

Selling price of Retailer = ₹ 36000
Tax collected by Retailer = $\frac{10}{100}\times$ 36000
= ₹ 3600

ii) Tax to be paid by the Retailer = 3600 - 3500
= ₹ 1000