Question

Calculate the value of ‘Sales’ from the following data:

\[ \begin{array}{|c|l|c|} \hline \textbf{S. No.} & \textbf{Particulars} & \textbf{Amount (in ₹ lakh)} \\ \hline (i) & Subsidies & 200 \\ (ii) & Operating Surplus & 500 \\ (iii) & Opening Stock & 100 \\ (iv) & Closing Stock & 600 \\ (v) & Intermediate Consumption & 3,000 \\ (vi) & Consumption of Fixed Capital & 700 \\ (vii) & Profits & 750 \\ (viii) & \text{Net Value Added at Factor Cost (NVA}_{FC}\text{)} & 2,000 \\ \hline \end{array} \]

Hint:

Always convert NVA\textsubscript{FC} to GVA\textsubscript{MP} before adding Intermediate Consumption to find Sales. Also be careful with sign conventions of subsidies and indirect taxes.

Answer 1

To calculate Sales, we use the following formula:

\[ \text{Sales} = \text{Gross Value Added at Market Price (GVA}_{MP}) + \text{Intermediate Consumption} \]

First, compute GVA_MP:

\[ \text{GVA}_{MP} = \text{NVA}_{FC} + \text{Depreciation} + \text{Net Indirect Taxes} \]

Where:
Depreciation = Consumption of Fixed Capital = 700
Net Indirect Taxes = Indirect Taxes - Subsidies (but only Subsidies is given, assume Net Indirect Taxes = - Subsidies)

\[ \Rightarrow \text{GVA}_{MP} = 2{,}000 + 700 - 200 = 2{,}500 \]

Now apply the formula for Sales using:

\[ \text{Sales} = \text{GVA}_{MP} + \text{Intermediate Consumption} \] \[ \Rightarrow \text{Sales} = 2{,}500 + 3{,}000 = \boxed{₹\ 5{,}500\ \text{lakh}} \quad (\text{Incorrect}) \]

Correction:

We should rather use this standard formula to compute Sales:

\[ \text{Sales} = \text{Value Added at Factor Cost (NVA}_{FC}) + \text{Intermediate Consumption} + \text{Depreciation} + \text{Net Indirect Taxes} + \text{Opening Stock} - \text{Closing Stock} \]

Substitute the given values:

\[ \text{Sales} = 2{,}000 + 3{,}000 + 700 - 200 + 100 - 600 = 5{,}600 - 700 = \boxed{₹\ 5{,}000\ \text{lakh}} \]

Final Answer: ₹ 5,000 lakh