Assume that a product has the following three stages of production: $$\begin{array} { c c }
\text { Production } & \text { Selling } \
\text { Stage } & \text { Price } \
\hline 1 & € 100 \
2 & € 250 \
3 & € 750
\end{array}$$ If the value-added tax (VAT)rate is 25%,what would be the VAT over all stages of production?

Question

Assume that a product has the following three stages of production: $$\begin{array} { c c } 
\text { Production } & \text { Selling } \
\text { Stage } & \text { Price } \
\hline 1 & € 100 \
2 & € 250 \
3 & € 750
\end{array}$$ If the value-added tax (VAT)rate is 25%,what would be the VAT over all stages of production?

Quizplus · Accepted Answer

The VAT is calculated on the value added at each stage. Stage 1 adds €100, Stage 2 adds €150 (€250-€100), and Stage 3 adds €500 (€750-€250). The VAT is 25% of the total value added: 0.25 * (€100 + €150 + €500) = €187.50.

Assume That a Product Has the Following Three Stages of Production