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 6344.403 yen
So, the cost per unit, in yen, is approximately 6,344 yen