Question

The marked price of an article is Rs. 900 and the rate of sales-tax on it is 6%. If on selling the article at its marked price, a retailer has to pay VAT = Rs. 4.80; find the money paid by him (including sales-tax) for purchasing this article.
A. Rs. 754.20
B. Rs. 869.20
C. Rs. 946.20
D. Rs. 1023.30

Answer 1

Hint: First find the tax amount on the marked price. After you have found the value of the tax charged on the article , you can easily find the tax paid. Letting a value for cost price, 6% of this value would be equal to this obtained tax paid value. And from here we get the required cost price.

Complete step-by-step solution:
Let us consider the given question and it is given in the question that the sales price or the marked price of the article is Rs 900.
We need to find the tax charged by the retailer which is equal to the 6% of the sales price, which is 900.
\[
   \Rightarrow 6\% {\text{ of 900}} = \dfrac{6}{{100}} \times 900 \\
   = {\text{Rs }}54 \\
 \]

Moving on we are required to calculate the value of the tax paid. For that, it is given that the VAT or the value added tax is Rs 4.80 and also, we have found the tax charged is Rs 54
$
\therefore {\text{VAT}} = {\text{Tax Charged}} - {\text{ Tax paid}} \\
   \Rightarrow {\text{Rs }}4.80 = {\text{Rs 54}} - {\text{ Tax paid}} \\
   \Rightarrow {\text{Tax paid}} = {\text{Rs 54}} - {\text{Rs }}4.80 \\
   \Rightarrow {\text{Tax paid}} = {\text{Rs }}49.20 \\
$

Now, we let the cost price of the article be $x$.
\[
  \therefore 6\% {\text{ of }}x = {\text{Rs }}49.20 \\
   \Rightarrow \dfrac{6}{{100}} \times x = {\text{Rs }}49.20 \\
   \Rightarrow x = {\text{Rs }}\dfrac{{49.20 \times 100}}{6} \\
   \Rightarrow x = {\text{Rs }}820 \\
\]

Thus, the cost price of the article is Rs 820.

Now we calculate the purchase price for the retailer by adding the tax paid and the cost price of the article.
$ \Rightarrow {\text{Rs }}820 + {\text{Rs 49.20}} = {\text{Rs 869.20}}$

Thus, the money paid by the retailer (including sales-tax) for purchasing this article is Rs 869.20. Thus option B is correct.

Note: Calculate all the taxes on the marked price and do not confuse between the terms VAT, tax paid and the tax charged. Do not forget to add the tax paid to the obtained cost price to get the final price paid by the retailer for purchasing the article. As this involves lots of calculations, be careful of the silly and calculation mistakes. Take care of the units of the given quantities.