Multiple choice

A manufacturer marks an article at Rs. $5,000$. He sells this 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 $8\%$, calculate the amount of VAT paid by: (i) the wholesaler (ii) the retailer

  1. (i) Rs. $20$         (ii) Rs. $30$
  2. (i) Rs. $30$         (ii) Rs. $50$
  3. (i) Rs. $40$         (ii) Rs. $60$
  4. (i) Rs. $50$         (ii) Rs. $80$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Wholesaler buys at 25% discount (Rs 3750) and sells at 15% discount (Rs 4250). VAT is 8% on the difference: 0.08 * (4250 - 3750) = Rs 40. Retailer buys at Rs 4250 and sells at Rs 5000. VAT is 0.08 * (5000 - 4250) = Rs 60.

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