VAT Calculations
Hey everyone,
This may sound dull but when performing percentage increases we multiply by (100+x)/100 and to perform decreases we multiply (100-x)/100.
For VAT when performing increases we multiply (100+x)/100 but when performing decreases why do we **divide** (100+x)/100.
For example unit price (net price) is £14 20% of this is £2.80 so with VAT total would be £16.80.
When using percentage decrease of the total price (£16.80) I get: £13.44 but dividing £16.80 by 1.2 I get £14 which is the correct price.
Why is this? And when should I use each method?
Thanks.
Posted from TSR Mobile
This may sound dull but when performing percentage increases we multiply by (100+x)/100 and to perform decreases we multiply (100-x)/100.
For VAT when performing increases we multiply (100+x)/100 but when performing decreases why do we **divide** (100+x)/100.
For example unit price (net price) is £14 20% of this is £2.80 so with VAT total would be £16.80.
When using percentage decrease of the total price (£16.80) I get: £13.44 but dividing £16.80 by 1.2 I get £14 which is the correct price.
Why is this? And when should I use each method?
Thanks.
Posted from TSR Mobile
Original post by dthomas86
Hey everyone,
This may sound dull but when performing percentage increases we multiply by (100+x)/100 and to perform decreases we multiply (100-x)/100.
For VAT when performing increases we multiply (100+x)/100 but when performing decreases why do we **divide** (100+x)/100.
For example unit price (net price) is £14 20% of this is £2.80 so with VAT total would be £16.80.
When using percentage decrease of the total price (£16.80) I get: £13.44 but dividing £16.80 by 1.2 I get £14 which is the correct price.
Why is this? And when should I use each method?
Thanks.
This may sound dull but when performing percentage increases we multiply by (100+x)/100 and to perform decreases we multiply (100-x)/100.
For VAT when performing increases we multiply (100+x)/100 but when performing decreases why do we **divide** (100+x)/100.
For example unit price (net price) is £14 20% of this is £2.80 so with VAT total would be £16.80.
When using percentage decrease of the total price (£16.80) I get: £13.44 but dividing £16.80 by 1.2 I get £14 which is the correct price.
Why is this? And when should I use each method?
Thanks.
This question is NOT a % decrease question
It is a reverse % question
So, you are correct with your increase and decrease
Example
Increase 20 by 14% = 1.14x20 = 22.80
Decrease 20 by 14% = 0.86x20 = 17.20
However - if a calculation has already been completed and you want to work out the value before the increase or decrease you have to use the reverse % technique
Example
After an increase of 15% I earn 27600, what did I earn before
Now you have to realise that we have done the increase calculation, so
1.15x(old wage) = 27600
So, now, you have to divide by 1.15 to get the original amount
Thanks for the help.
Taking the same question above say your pay was reduced by 15% and your new pay is £27,600 and you want to find your original pay would you divide the new amount by 0.85 giving you £32,471 (1dp).
Posted from TSR Mobile
Taking the same question above say your pay was reduced by 15% and your new pay is £27,600 and you want to find your original pay would you divide the new amount by 0.85 giving you £32,471 (1dp).
Posted from TSR Mobile
Original post by dthomas86
Thanks for the help.
Taking the same question above say your pay was reduced by 15% and your new pay is £27,600 and you want to find your original pay would you divide the new amount by 0.85 giving you £32,471 (1dp).
Posted from TSR Mobile
Taking the same question above say your pay was reduced by 15% and your new pay is £27,600 and you want to find your original pay would you divide the new amount by 0.85 giving you £32,471 (1dp).
Posted from TSR Mobile
Yes
The same thinking would be
0.85 x (old pay) = 27600
Brilliant thanks sorry it sounds dull but I knew the working out just didn't know whether to use percentage increase/decrease or reverse percentages.
Thanks for the help!!
Posted from TSR Mobile
Thanks for the help!!
Posted from TSR Mobile
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