Priya bought a suitcase for $ 2,730 $ . The VAT for this item is $ 5\% $ What was the price of the suitcase before VAT was added? Also state how much is the VAT.

Question

Priya bought a suitcase for  $ 2,730 $ . The VAT for this item is  $ 5\%  $ What was the price of the suitcase before VAT was added? Also state how much is the VAT.

Vedantu Content Team · Accepted Answer

Hint: VAT can be defined as the tax which is recovered on the sale and tax is paid on the purchase. Here the cost price of the suitcase is not given so, assume any reference variable as the price and find the cost price and then the VAT.Complete step-by-step answer:Let us assume the unknown price of the suitcase before VAT $  = x $ Now, the cost price after VAT can be given  $  = \dfrac{{105}}{{100}}x $ Now given that the cost price of the suitcase is  $ 2730 $ Now frame the equation – $ 2730 = \dfrac{{105}}{{100}}x $ Perform the cross multiplication for the above expression, where the numerator of one side is multiplied with the denominator of the opposite side and vice-versa. $ \dfrac{{2730 \times 100}}{{105}} = x $ Find the factors of the term in the above expression – $ \dfrac{{105 \times 26 \times 100}}{{105}} = x $ Common factors from the numerator and the denominator cancel each other and therefore remove from the numerator and the denominator of the above expression. $  \Rightarrow x = 26 \times 100 $ Simplify finding the product of the terms in the above expression – $  \Rightarrow x = 2600 $ VAT can be calculated by finding the difference of the cost price and the buying price after VAT.VAT $  = 2730 - 2600 $ Find the difference of the terms in the above expression –VAT $  = 130 $ Rs. Hence, applicable VAT is  $ 130 $ Rs.So, the correct answer is “ $ 130 $ Rs”.Note: Be careful while framing the first equation for the VAT and tax applicable. Always remember that the cost price is always less than the cost price with VAT. Be careful while simplifying mathematical expressions and always remember when its percentage is always with respect to hundred. Always remember that percentage is always based on hundred percent. Be good in multiples and the division and always remove common factors from the numerator and the denominator for the simplified form.