Assume that a product as the following three stages of production: $\begin{array}{ll}
\text {Production }& \text { Selling }\
\text { Stage } & \text { Price } \
1 & \text { EUR600 } \
2 & \text { EUR1,400 } \
3 & \text { EUR1,700 }
\end{array}$ If the value-added tax (VAT)rate is 15%,what would be the incremental VAT at Stage 2 of production?

Question

Assume that a product as the following three stages of production: $\begin{array}{ll}
 \text {Production  }& \text { Selling  }\
\text { Stage } & \text { Price } \
1 & \text { EUR600 } \
2 & \text { EUR1,400 } \
3 & \text { EUR1,700 }
\end{array}$ If the value-added tax (VAT)rate is 15%,what would be the incremental VAT at Stage 2 of production?

Quizplus · Accepted Answer

The incremental VAT at Stage 2 is calculated based on the difference in selling price between Stage 2 and Stage 1, which is EUR1,400 - EUR600 = EUR800. The VAT at 15% on this difference is 0.15 * EUR800 = EUR120.

Assume That a Product as the Following Three Stages of Production