(Assumption: Profit is Rs 20 at each stage of the selling chain). The manufacturer A, the sale distributor B, the wholesaler C, and the retailer D live in the same state where the rate of VAT is 8%. The cost price of A's commodity is Rs 200. Find the amount of VAT if A sells to B, B sells to C, and C sells to D. Also, find the selling price of D.
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Solution

Formula: 1 Mark
Steps: 2 Marks
Answer: 1 Mark

Rate of VAT = 8%
$\begin{matrix} M a n u f a c t u r e r & D i s t r i b u t o r & W h o l e s a l e r & R e t a i l e r A & B & C & D C . P . & R s 200 & R s 220 & R s 240 & R s 260 S . P . & R s 220 & R s 240 & R s 260 & R s 280 V A T = 8 % & R s 17, 60 & R s 19.20 & R s 20.80 & R s 22.40 T a x c h a r g e d V A T & R s 17.60 & R s 1.60 & R s 1.60 & R s 1.60 \end{matrix}$
Total VAT = Rs 17.60 + Rs 1.60 + Rs 1.60 + Rs 1.60 = Rs 22.40
Actual selling price of D = Rs 260 + Rs 20 + Rs 22.40 = Rs 302.40

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