Marked Price, Discount and VAT

Marked Price, Discount and VAT

Marked Price, Discount and VAT


Marked Price

The price which is listed or printed on the item or article for sell is called the marked price or labelled price of the item. It is denoted by MP.

 

Discount

When a shopkeeper reduces the marked price of any article and sells it to costumers, the reduced amount is called discount. Discount is usually given as a certain percent of marked price.

Thus,

Discount Amount = Discount percent of MP, Selling Price (SP) = MP – Discount Amount (Discount% of MP) and Discount percent = (Discount Amount)/MP  ×100%


VAT ( Value Added Tax)

VAT or Value Added Tax is a government tax levied on the cost of cetain goods or services. The VAT rate is usually in percent and is decided by the government. The rate of VAT varies from country to country and there are certain goods and cervices which are free from VAT. For example, educational items, social welfare services, etc. are VAT-free good and services.

VAT is levied on actual selling price. So,

VAT amount = VAT percent of SP, SP with VAT = SP + VAT amount and VAT percent = (VAT Amount)/SP  ×100%


List of formulae on MP, Discount, SP and VAT

1. Discount Amount = Discount % of MP     2. Discount % = (Discount Amount)/MP  ×100%      3. SP = MP – Discount Amount     4. SP = (100 - d%)/(100 )  × MP     5. MP = 100/(100 - d% )  × SP     6. VAT amount = VAT percent of SP     7. VAT percent = (VAT Amount)/SP  ×100%     8. SP with VAT = SP + VAT amount     9. SP with VAT = (100 + v%)/(100 )  × SP     10. SP = 100/(100 + v% )  × SP with VAT     11. MP = (100 × 100)/((100 - d%)(100 + v%))  × SP with VAT     12. SP with VAT = ((100 - d%)(100 + v%))/(100 × 100)  × MP


Worked Out Examples

Example 1: The marked price of a book is Rs. 200. If a discount of 10% is offered. Find the selling price of the book.

Solution: Here,

MP = Rs. 200 Discount = 10% SP = ? We know, 	SP = MP – discount amount 	     = 200 – 10% of 200 	     = 200 – 10/100 × 200 	     = 200 – 20 	     = Rs. 180

Selling price of the book = Rs. 180.

 

Example 2: A shopkeeper allowed 10% discount in a watch of marked price of Rs. 600. If he got 8% profit, find the cost price of the watch.

Solution: Here,

MP = Rs. 600 Discount = 10% Profit = 8% SP = ?  CP = ? We know, 	SP = MP – discount amount 	     = 600 – 10% of 600 	     = 600 – 10/100 × 600 	     = 600 – 60 	     = Rs. 540 Now, 	CP = 100/(100 + P%)  ×SP                  = 100/(100 + 8)  ×540                  = 100/108  ×540                  = Rs. 500

The cost price of the watch = Rs. 500.

 

Example 3: The marked price of a computer is Rs. 30000. If it is sold after 20% discount and then 30% VAT is levied in it. Find the price of computer including VAT.

Solution: Here,

MP = Rs. 30000 Discount = 20% VAT = 13% SP with VAT = ? We know, 	SP with VAT = ((100 - d%)(100 + v%))/(100 × 100)  ×MP 	     	          = ((100 - 20)(100 + 13))/(100 × 100)  ×30000 	                      = (80 × 113)/(100 × 100)  ×30000 	     	           = Rs. 27120

The price of computer including VAT = Rs. 27120.

 

Example 4: After allowing 15% discount on the marked price of a radio 13% VAT is levied, then the cost of radio becomes Rs. 1997. Find the marked price of the radio.

Solution: Here,

SP with VAT = Rs. 1997 Discount = 15% VAT = 13% MP = ? We know, 	MP = (100 × 100)/((100 - d%)(100 + v%))  ×SP with VAT 	      = (100 × 100)/((100-15)(100+13))  ×1997 	      = (100 × 100)/(85 × 113)  ×1997 	       = Rs. 2080 (approx.)

The marked price of the radio = Rs. 2080.

 

Example 5: After allowing 20% discount on the marked price and then levying 10% VAT, a radio was sold. If buyer had paid Rs. 320 for VAT, how nuch was the discount?

Solution: Here,

MP = Rs. x (let) Discount = 20% VAT = 10% VAT amount = Rs. 320 We know, 	SP = MP – discount amount 	     = x – 20% of MP 	     = x – 20/100  ×x 	     = (100x - 20x)/100      = 80x/100 VAT amount = Rs. 320 i.e.	10% of SP = 320 or,	10/100 × 80x/100 = 320 or,	8x/100 = 320 or,	8x = 32000 or,	x = 32000/8 or,	x = Rs. 4000,  ∴ MP = Rs. 4000 ∴ Discount amount = 20% of MP 		        = 20/100 × 4000 		        = Rs. 800

Rs. 800 was the discount amount.

 

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