lets take for example that i sell a product for 1000 euro
the vat on this product is 21%
I would automatically assume that the vat owed on this item would be 210 euro
i.e. divide 100 into 1000 and then multiply by 21
sales value = 1000 euro
vat on sales= 210 euro
the accountant is telling me that the correct figure is 173.55
how is this possible?
what is the forumla to calculate target gp
ie have a product at 1 euro and want a target gp of 20%
Your accountant is correct -
to get the VAT content on 1000.00 gross you need to divide the 1000.00 by 1.21 = Net of Vat 826.44 X by 21% is 173.55
Hope this helps.
Sorry but I dont know how to calculate the GP.
What has this got to do with College Work?
but why do you have to do it that way
part of an assignment we had in dcu
surely if someone asks you what is 21 % of 1000 euro you would say 210 euro
its a bit confusing do ya think??
It is confusing alright. The question might of been worded badly.
I have a PC. Dont care how much it costs to build. But I want to break into the 1000 euro PC market with it. How much should I sell the PC to the shops for? taking into account they add on 21% VAT?
Obviously cant sell it for 1000 because they will add on VAT
1000 * 100/121 = 826.45 (Price to sell to the shops)
So when the shops go selling the PC, they add on 21% VAT.
826.45 * 121/100 = 1000 (Price to sell to customers)
Working out how much VAT is paid
826.45 * 21/100 = 173.55
Hope that helps. Its the kind of exam question that can take a few minutes to understand. Then another few to work out the answer.
sorry for digging up this old post but because its no1 on google i felt obligated to clarify.
( 100 / ( 100 + [VAT Rate] ) * [Final Price] = [Pre-VAT Price]
( 100 / ( 100 + 17.5 ) ) * 84.99 = 72.33 (rounded)
i was doing some php code, here it is
$recordtax=( 100 / ( 100 + $vat ) * $finalcost);
$recordtax is the vat that was added