₦airaland Forum

GANDALF1:
VAT is an abbreviation for Value Added Tax. It simply means the tax that a user will have to pay to the government for using a raw material that has been improved on by a manufacturer.
The manufacturer purchased the plastic + ink and added value by turning them into ballpoint pens. His unit sale price of #15/each is inclusive of his cost price, profit and value added tax.
Your marketer added value by transporting the pen and storing it. Hence the 5% VAT he is collecting and must remit to government.
If you purchase the pens and use them to create a back-to-school kit for kids, you have added value and authorised to collect VAT and remit to Government.
So in reality, everybody pays/remits VAT at their end.

talk2odim:
Because the question says "VAT inclusive" and VAT goes to the government.....

talk2odim:
Because the question says "VAT inclusive" and VAT goes to the government.....

ednut1:
i believe this happend to u not your friend mr man , ur question says inclusive of tax, the customer has paid the vat. the marketer or his company has to remit it to the government shikena

FriedPlantain:
Answer

talk2odim:
I believe it is the customer.....

talk2odim:
reviewing: kindly disregard some aspects of the first solution. i was multi tasking and just took time to read through again.



total sales = N1,735.00

Less: VAT of 5% = N 86.75.
balance on sales: = N 1,648.25

less: Cost price of pens: N1,500
Gross Profit: = N148.25
Less 10% tax = N133.425 (net profit)

talk2odim:
Cost price of the pen; N15 x 100= N1500

Sales:
1. N18 x 70 pens = N1,260
2. N20 x 20 pens = N 400
3. N7.50 x 10 pens = N 75 ( where N7.5 is half of the cost price and the balance of pens id 10 units)

total: 100 pens N1,735

less: 10% vat ie N173.50 = N1,561.50

Net profit: N1,561.50 - N1,500 = N61.50

talk2odim:
take home profit is N61.50k