Calculating VAT for Wallis Company
What is the quantity of circuit boards manufactured by Wallis Company?
Wallis Company had manufactured 8.3 million boards. Therefore, the quantity sold = 8.3 million = 8,300,000.
What is the total sales value of the circuit boards sold by Wallis Company?
The total sales value can be calculated by multiplying the sales quantity with the selling price per unit. Total Sales Value = Sales Quantity x Selling price per unit = 8,300,000 x $7.50 = $62,250,000.
What amount of VAT does Wallis Company owe?
By applying the VAT rate of 15% on the total sales value, we can find out the VAT amount. VAT amount = Sales value x VAT Rate = $62,250,000 x 15% = $9,337,500.
Answers:
1. The quantity of circuit boards manufactured by Wallis Company is 8.3 million (8,300,000 units).
2. The total sales value of the circuit boards sold by Wallis Company is $62,250,000.
3. Wallis Company owes a VAT of $9,337,500.
Explanation:
Wallis Company produced 8.3 million circuit boards at a material cost of $5 per unit and sold them for $7.50 per unit, resulting in a net profit of $1.50 per unit. The labor and overhead costs added $1 to the cost per unit.
By multiplying the sales quantity with the selling price per unit, we get the total sales value of $62,250,000. Applying the 15% VAT rate on the total sales value gives us the VAT amount of $9,337,500 that Wallis Company owes to the foreign country where the boards were produced.
Understanding how VAT is calculated is essential for businesses operating in countries with such taxes to ensure compliance with local regulations and accurate financial reporting.