Q:

One producer pays $52 of VAT per unit on one good, the VAT rate is 15.8%, the exchange rate between dollar and yen is 0.00545$/yen and he makes a return of 23% on the price VAT included. What is the cost per unit, in yen?

Accepted Solution

A:
Calculate the price of the good before VAT: Price before VAT = Price with VAT / (1 + VAT rate) Price before VAT = $52 / (1 + 15.8%) = $52 / 1.158 = $44.86 Calculate the profit margin in dollars: Profit Margin = Price before VAT * Return Rate Profit Margin = $44.905 * 23% = $10.328 Calculate the cost per unit in dollars: Cost per Unit = Price before VAT - Profit Margin Cost per Unit = $44.901 - $10.328 = $34.577 Convert the cost per unit to yen using the exchange rate: Cost per Unit in Yen = Cost per Unit in Dollars / Exchange Rate Cost per Unit in Yen = $34.577 / 0.00545 $/yen β‰ˆ 6344.403 yen So, the cost per unit, in yen, is approximately 6,344 yen