Wallis Company VAT Calculation
How much VAT does Wallis Company owe?
VAT: $0
To calculate the VAT owed by Wallis Company, we need to determine the total value of the circuit boards produced and then calculate the VAT based on the applicable rate.
Total cost per unit:
Material cost per unit = $5.80
Labor and overhead per unit = $1.16
Total cost per unit = Material cost per unit + Labor and overhead per unit
Total cost per unit = $5.80 + $1.16 = $6.96
Net profit per unit:
Selling price per unit = $8.70
Net profit per unit = $1.74
VAT calculation:
VAT rate = 15% (expressed as 0.15)
VAT per unit = Selling price per unit - Total cost per unit - Net profit per unit
VAT per unit = $8.70 - $6.96 - $1.74 = $0
Total VAT owed = VAT per unit × Number of units produced
Total VAT owed = $0 × 7,900,000 units = $0
Therefore, Wallis Company does not owe any VAT.