Assume that a product has the following three stages of production: $$\begin{array} { c c }
\text { Production } & \text { Selling } \
\text { Stage } & \text { Price } \
\hline 1 & € 1,000 \
2 & € 2,000 \
3 & € 3,000
\end{array}$$ If the value-added tax (VAT)rate is 20%,what would be the VAT over all stages of production?

Question

Assume that a product has the following three stages of production: $$\begin{array} { c c } 
\text { Production } & \text { Selling } \
\text { Stage } & \text { Price } \
\hline 1 & € 1,000 \
2 & € 2,000 \
3 & € 3,000
\end{array}$$ If the value-added tax (VAT)rate is 20%,what would be the VAT over all stages of production?

Quizplus · Accepted Answer

To calculate the VAT over all stages of production, we need to find the VAT on each stage and then add them up.

The VAT on each stage is 20% of the given price. So,

- VAT on Stage 1 = 20% of €1,000 = €200 
- VAT on Stage 2 = 20% of €2,000 = €400 
- VAT on Stage 3 = 20% of €3,000 = €600

Adding all three VAT amounts, we get:

€200 + €400 + €600 = €1,200

Therefore, the answer is B) €600.

Assume That a Product Has the Following Three Stages of Production