Question

A bicycle manufacturer sells a bicycle at ₹\[1308\] after adding the VAT at the rate of \[9\% \] still he makes a profit of \[20\% \] on the sale of each bicycle. What is the manufacturing cost of each bicycle?

Answer 1

Hint: To solve this question, we will first assume the manufacturing cost price of each bicycle be x. Then we are given a few conditions in the question, we will use them one by one and make a linear equation out of it to get the value of x. After getting the value of x using the first condition, we will apply the second condition, and hence get our required answer.

Complete step-by-step answer:
We have been given that a bicycle manufacturer sells a bicycle at ₹\[1308\] after adding the VAT at the rate of \[9\% \] still he makes a profit of \[20\% \] on the sale of each bicycle. We need to find the manufacturing cost of each bicycle.
Let the manufacturing cost price of each bicycle be x.
Now, according to the question, he sells a bicycle at ₹\[1308\] after adding the VAT at the rate of \[9\% .\]
So, the equation of selling price of bicycle after adding \[9\% \] VAT $ = \dfrac{{100 + 9}}{{100}} \times x = 1308$
$
   \Rightarrow x = \dfrac{{100 \times 1308}}{{109}} \\
  x = 1200 \\
$
So, the manufacturing cost is ₹\[1200.\]
But it is also given that he makes a profit of \[20\% \] on the sale of each bicycle. That means ₹\[1200\] is the price after adding profit. That means the original manufacturing cost is without the profit.
So, original manufacturing cost $ = \dfrac{{100}}{{120}} \times 1200$
\[ = \] ₹ \[1000.\]
Thus, the manufacturing cost of each bicycle is ₹\[1000.\]

Note: Students should notice that in the question, we are given the VAT. Let us understand VAT in detail. VAT stands for Value Added Tax. It is also known as GST, i.e., Goods and Services tax. This tax is levied on the price of a product, at each stage of services offered, at each stage of production, distribution, and even to sale to the end consumer.