Question

A shopkeeper sells some edible oil for \[Rs\text{ }7,200\] at its MP. The shopkeeper pays GST of \[Rs\text{ 120}\] to the government. If the GST charged throughout is \[5\%\], calculate the price paid by the shopkeeper for the oil inclusive of tax.

Answer 1

Hint: Firstly calculate the value of the profit using the given GST and then try to find out the cost price of the edible oil to the shopkeeper using profit. After that calculate the tax price that the shopkeeper pays. Then add the tax price and the cost price to get the total amount paid by the shopkeeper.

Complete step by step answer:
The concept used in this question is of profit and loss. And to solve this question we should be aware of the terms like selling price(S.P.), cost price(C.P.) and tax.
As per the given question, the shopkeeper is selling some edible oils at the price of \[Rs\text{ }7,200\]. This means that it is behaving like a selling price or S.P. for this question.
And GST for this question is equal to the \[5\%\] of the profit.
\[\Rightarrow GST=5\%\text{ }of\text{ Profit}\]
It is given in the question that the total GST paid by the shopkeeper is \[Rs\text{ 120}\].
\[\Rightarrow Rs\text{ 120}=5\%\text{ }of\text{ Profit}\]
From here we can get the value of profit as,
\[\Rightarrow \text{Profit }=\text{ }\dfrac{120}{5}\times 100\]
\[\Rightarrow \text{Profit }=\text{ }Rs\text{ }2400\]
We can also express the profit as the difference between the price at which the shopkeeper sells the product and the price at which the shopkeeper buys the same product.
\[\Rightarrow \text{Profit }=SP-CP\]
We know the values of profit and the selling price so from here we can calculate the value of the cost price.
\[\Rightarrow CP=Rs(7200-2400)\]
\[\Rightarrow CP=Rs4800\]
The shopkeeper pays tax at the cost price only so the tax paid at the time of buying the products by the shopkeeper is calculated as,
\[\Rightarrow 5\%\text{ of }CP\]
As per the above calculation the value for the CP is \[Rs\text{ }4800\].
\[\Rightarrow 5\%\text{ of 4800}\]
\[\Rightarrow Rs\text{ }240\]
The total price paid by the shopkeeper for the oil inclusive of tax means we have to calculate the value of the total price paid by the shopkeeper to buy the edible oil including the value of the tax also.
\[\Rightarrow Rs\text{ (4800+240)}\]
\[\Rightarrow Rs\text{ 5040}\]
Hence we can conclude that the total price paid by the shopkeeper to buy the edible oil including the value of the tax also is \[Rs\text{ 5040}\].

Note:
The shopkeeper will always be in profit if and only if the selling price of the product is greater than the cost price. And the shopkeeper will always be at a loss if it is the case that the cost price is greater than the selling price of the item. So we can say that the concept of profit and loss is very important in business.