A wholesaler purchased a washing machine for Re 60,000 and sold it to a retailer at 10% profit. The retailer spent Rs 2,400 for transportation and Rs 1,600 for local tax. Then he/she sold it to a customer at 12% profit. How much did the customer pay for it with 13% VAT?

Answer: Rs 88,592

Solution:

When the washing machine is bought by wholesaler and sold to a retailer,

Purchasing Price (A) = Rs 60000

Profit Percentage ($P_1$%) = 10%

Selling Price (SP) = $A ( 1 + \frac{P_1%}{100}$

$= A ( 1 + \frac{10}{100})$

$= 60000 × \frac{110}{100}$

$= Rs 66000$

When the washing machine is bought by the retailer and sold to a customer,

Cost Price (CP) = Rs 66000

Transportation cost (B) = Rs 2400

Local tax (C) = Rs 1600

Profit Percentage ($P_2$%) = 12%

VAT percentage (VAT%) = 13%

Now,

Required cost price (D) = CP + B + C

$= 66000 + 2400 + 1600$

$= Rs 70000$

And,

Selling Price (SP$_2$) = $D ( 1 + \frac{P_2%}{100})$

$= D ( 1 + \frac{12}{100})$

$= 70000 × \frac{112}{100}$

$= Rs 78400$

Also,

SP with VAT = $SP_2 ( 1 + \frac{VAT%}{100})$

$= SP_2 ( 1 + \frac{13}{100})$

$= 78400 × \dfrac{113}{100}$

$= Rs 88592$

Hence, the customer paid Rs 88,592 for the washing machine which was purchased for Rs 60,000 by the wholesaler, including 13% VAT.

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