A wholesaler buys a TV from the manufacturer for Rs 25,000. He marks the price of the TV $20 %$ above his cost price and sells it to a retailer at a $10 %$ discount on the marked price. If the rate of VAT is $8 %$ , find the :
(i) Marked price
(ii) Retailer's cost price inclusive of tax
(iii) VAT paid by the wholesaler.
[3 MARKS]

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Solution

Each subpart: 1 Mark
Let C.P. of manufacturer be Rs x
VAT = 8%
So, S.P. of manufacturer = Rs 25000
Hence, $x + 8 % o f x = 25000$
$\Rightarrow$ $x + \frac{8 x}{100} = 25000$
$\Rightarrow$ $\frac{108 x}{100} = 25000$
$\Rightarrow$ $x = \frac{25000 \times 100}{108}$
$∴$ $x = R s 23148$
Now C.P. of TV for wholesaler Rs 25000
(i) Marked price of TV = $R s 25000 + 20 % o f 25000$
$= R s 25000 + R s \frac{25000 \times 20}{100}$
$= R s 25000 + R s 5000$
= Rs 30000
(ii) C.P. of TV for retailer
$= R s 30000 - R s 30000 \times 10 % (d i s c o u n t)$
= Rs 30000 - Rs 3000
= Rs 27000
Now, C.P. of TV for retailer inclusive of tax
= Rs 27000 +Rs $2700 \times 8 % (V A T)$
= Rs 27000 + Rs $\frac{27000 \times 8}{100}$
= Rs 27000 + Rs 2160
= Rs 29160
(iii) VAT paid by the wholesaler = Rs 25000 - Rs 23148
= Rs 1852

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