Application 1

Determine the wholesale price and retail price if manufacturer’s wholesale price is
650 MDL (without VAT). Commercial unit excess is 10%. Excise for retail is 14%,
VAT-20%, Excise – 10%.
I. M (excise) + VAT
II. C1 (wholesale) +10% + VAT
III. C2 (retail) +14% + VAT
Solution:
Wholesale means the sale of goods in voluminous quantity, at a low price. The business
of selling goods to end consumers in small lots at a profit is known as Retail.
1. The manufacturer’s wholesale price without VAT: 650 MDL
2. Determination the VAT on the manufacturer's wholesale price: 650*20% = 130
MDL
3. The manufacturer’s wholesale price with VAT: 650+130 = 780 MDL
4. Determine the commercial excise of wholesale price: 650 *10% = 65 MDL
5. The wholesale price, negotiated by the wholesale entity without VAT:
650+65=715 MDL
6. Calculation of VAT on the wholesale price of the commercial wholesale entity:
715*20% = 143 MDL
7. VAT paid in the budget: 143-130 = 13 MDL
8. Wholesale price with VAT: 143+715 = 858 MDL
9. Determine the commercial excise of retail price: 715 * 14% = 100,1 MDL
10. Retail price without VAT: 715+100,1 = 815,1 MDL
11. VAT on the retail price: 815,1*20% = 163,02 MDL
12. VAT paid on the budget: 163,02-143= 20,02 MDL
13. Retail price with VAT: 815,1+163,02 = 978,12 MDL
Price structure:
978,12 = 650+65+100,1+130+13+20,02
100% = 66,45%+6,65%+10,23%+13,29%+1,33%+2,05%
Answer: The wholesale price: 858 MDL
The retail price: 978,12 MDL
 Application 2
Determine manufacturer’s wholesale price, if unit cost = 450 MDL, rate of return
20 %, excise tax 15 MDL for unit, VAT = 20%.
Solution :
Wholesale price is the price charged for a product as sold in bulk to large trade or
distributor groups as opposed to what is charged to consumers.
The wholesale price is the sum of a given product’s cost price plus the manufacturer’s profit
margin.
1. Wholesale price without VAT: 450 * 20% = 540 MDL
2. Calculate the VAT: 540 * 20% = 108 MDL
3. Wholesale price with VAT: 540+108 = 648 MDL
4. Wholesale price with excise tax without VAT: 540 + 15 = 555 MDL
5. VAT on the wholesale price: 555 * 20% = 111 MDL
6. Manufacturer’s wholesale price: 555+111 = 666 MDL
Answer: The wholesale price = 666 MDL