Question

Calculate Net Value Added at factor cost from the following. 3 ITEMS Rs. CRORES
a. Purchase of raw materials 30
b. Depreciation 12
c. Sales 200
d. Excise tax 20
e. Opening stock 15
f. Intermediate consumption 48
g. Closing stock 10

Answer 1

Net Value added at factor cost (NVAFC) amounts to 95 Crore

Explanation:

The formula for computing the Net Value added at factor cost (NVAFC) is as:

Net Value added at factor cost (NVAFC) = Sales + Change in stock - Purchase of intermediate goods - Depreciation - Net indirect tax

where

Sales is 200

Change in stock is computed as:

Change in stock = Opening stock - Closing stock

Change in stock = 15 - 10

Change in stock = 5

Purchase of intermediate goods and also Purchase of raw material is intermediate consumption which amounts to 78 (48 + 30)

Depreciation is 12

Net indirect tax is excise tax which is 20

So, putting the values above:

Net Value added at factor Cost (NVAFC) = 200 + 5 - 78 - 12 - 20

Net Value added at factor Cost (NVAFC) = 95 Crore