Saika Co. Ltd. a manufacturer, purchases raw materials at Sh.1,000,000. The
company then incurs conversion costs which are estimated at 40% of material
cost. The profit mark-up is 20% of total cost. The completed product is sold
to Chemuka Wholesalers who then incur conversion costs of 50% on cost.
The wholesalers mark-up is 10% on cost. The wholesaler sells the product to a
retailer, who has no conversion costs but sells at a profit of 30%.
Required:
Assuming VAT is charged at 15% on all products, compute the total VAT payable.
(10 marks)