Calculating Final Price with VAT Discount

Understanding how to calculate the final price of an article after applying a discount and adding VAT is crucial for any business. This article will walk through a comprehensive example using the marked price of an article for Rs 6000, the application of a 10% discount, and the addition of 10% VAT. By following these steps carefully, you can ensure accurate pricing for your products.

Step-by-Step Calculation

Original Data

The marked price of the article is Rs 6000. We need to calculate the final price after applying a 10% discount and then adding 10% VAT.

Applying the Discount

First, we'll calculate the price of the article after a 10% discount. If the marked price is x, the discounted price can be calculated as follows:

[ text{Discounted Price} x times left(1 - frac{10}{100}right) ]

Let's apply this to the marked price of Rs 6000:

[ text{Discounted Price} 6000 times left(1 - frac{10}{100}right) 6000 times frac{90}{100} Rs 5400 ]

Adding VAT

Next, we'll add a 10% VAT to the discounted price. The formula for calculating the final price including VAT is:

[ text{Final Price} text{Discounted Price} times left(1 frac{10}{100}right) ]

Applying this to the discounted price of Rs 5400:

[ text{Final Price} 5400 times left(1 frac{10}{100}right) 5400 times frac{110}{100} Rs 5940 ]

Combining the Steps

Alternatively, we can combine the steps into a single formula:

[ text{Final Price} text{Marked Price} times left(1 - frac{10}{100}right) times left(1 frac{10}{100}right) ]

Applying this formula to the marked price of Rs 6000:

[ text{Final Price} 6000 times left(1 - frac{10}{100}right) times left(1 frac{10}{100}right) 6000 times frac{90}{100} times frac{110}{100} Rs 5940 ]

Verification

To verify, we can break it down:

1. Calculate the price after discount: (6000 times 0.9 Rs 5400)

2. Calculate the VAT on the discounted price: (5400 times 0.1 Rs 540)

3. Add the VAT to the discounted price: (5400 540 Rs 5940)

The final price of the article is Rs 5940.

Conclusion

This example illustrates how to accurately calculate the final price of an article after applying a discount and adding VAT. Understanding this process is essential for ensuring pricing accuracy, which helps in maintaining customer trust and adhering to business finanical standards.