Profit Calculation and Selling Price of an Article Considering GST
The fine art of selling an item involves more than just the marked price and discount structures. This article delves into a practical case scenario where a shopkeeper purchases an article, increases its selling price, and considers the impact of GST (Goods and Services Tax) on the overall profit and the final selling price.
Introduction to the Scenario
Consider an article marked at Rs. 10,000. A shopkeeper buys it at a 20% discount, reducing the cost price to Rs. 8,000. Additionally, the shopkeeper increases the article's price by Rs. 3,000, making the new marked price Rs. 11,000. Given a GST rate of 10%, let's explore how this affects the profit and the final selling price of the item.
Cost Price and Marked Price Adjustment
Initially, the marked price of the article is Rs. 10,000. After applying a 20% discount, the cost price for the shopkeeper is Rs. 8,000. By increasing the marked price by Rs. 3,000, the new marked (and thus the selling price before GST) rises to Rs. 11,000.
Impact of GST and Profit Calculation
It's important to note that GST (Goods and Services Tax) is levied on the input cost of Rs. 8,000, which amounts to Rs. 800. Therefore, the addition of GST on the cost price brings the total cost to Rs. 8,000 Rs. 800 Rs. 8,800.
With a selling price of Rs. 11,000 and a cost price (including GST) of Rs. 8,800, the profit can be calculated as:
Profit Selling Price - Total Cost Price Rs. 11,000 - Rs. 8,800 Rs. 2,200
Final Selling Price Including GST
The selling price, including GST, is the sum of the selling price before GST and GST on the selling price:
Selling Price with GST Rs. 11,000 (GST on Rs. 11,000 at 10%)
GST 10% of Rs. 11,000 0.10 * 11,000 Rs. 1,100
Therefore, the final selling price with GST is:
Total Selling Price Rs. 11,000 Rs. 1,100 Rs. 12,100
Conclusion
In conclusion, the shopkeeper earns a profit of Rs. 2,200 on the article with a final selling price, including GST, of Rs. 12,100. Understanding the impact of discounts, marked prices, and GST is crucial for making informed decisions in sales and profit margins.
Related Keywords
profit calculation selling price GST impact discount pricing cost analysisFor more detailed insights into retail sales and taxation, explore further articles and tutorials on these topics.