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QUESTION 6

Mr. Raath is renting a house in Kugung where he is paying electricity calculated using the tariffs in TABLE 1 below.

TABLE 1: DOMESTIC ELECTRICITY TARIFFS FOR 2020/2021
\begin{tabular}{|c|c|c|}
\hline
Tariff Blocks & \begin{tabular}{l}
Rate \\
(R/kWh)
\end{tabular} & Remarks \\
\hline
Block [tex]$1(0-50 \text{ kWh})$[/tex] & 1.2000 & All amounts are VAT exclusive. \\
\hline
Block [tex]$2(51-350 \text{ kWh})$[/tex] & 1.4400 & \\
\hline
Block [tex]$3(351-600 \text{ kWh})$[/tex] & 2.0361 & VAT is charged at 15\%. \\
\hline
Block [tex]$4(\ \textgreater \ 600 \text{ kWh})$[/tex] & 2.4069 & \\
\hline
\end{tabular}

Use TABLE 1 above to answer the questions that follow.

6.1 Explain the term tariff in the above context.

6.2 Round off the tariff for Block 3 to the nearest cent.

6.3 Mr. Masigo used 410 kWh units of electricity in June 2020. Calculate how much he paid, including VAT, for electricity during that month.



Answer :

GinnyAnswer
Certainly! Let’s go through the steps for solving each part of the question in detail.

### 6.1 Explain the term tariff in the above context.

In the given context, the term "tariff" refers to the rate at which electricity is charged to the consumer. These rates are given in Rands per kilowatt-hour (R/kWh) and they vary depending on the amount of electricity consumed. The tariffs are structured into blocks, where different rates apply to different ranges of electricity usage. For example, Block 1 applies to the first 50 kWh used, Block 2 applies to 51-350 kWh, and so on. The tariffs specified are exclusive of the VAT, which is an additional tax at 15%.

### 6.2 Round off the tariff for block 3 to the nearest cent.

The given tariff for Block 3 is 2.0361 R/kWh.
To round this to the nearest cent:
[tex]\[ \text{Rounded Tariff} = 2.04 \][/tex]

### 6.3 Mr. Masigo used 410 kWh units of electricity in June 2020. Calculate how much he paid, including VAT, for electricity during that month.

Let's break down Mr. Masigo's electricity usage and costs.

1. Usage Breakdown and Cost Calculations:

- Block 1 (0-50 kWh):
- Rate: 1.2000 R/kWh
- Usage: 50 kWh
- Cost: [tex]\( 50 \, \text{kWh} \times 1.2000 \, \text{R/kWh} = 60.0 \, \text{R} \)[/tex]

- Block 2 (51-350 kWh):
- Rate: 1.4400 R/kWh
- Usage: 300 kWh (since 410 - 50 = 360 kWh, capped at 300 kWh for this block)
- Cost: [tex]\( 300 \, \text{kWh} \times 1.4400 \, \text{R/kWh} = 432.0 \, \text{R} \)[/tex]

- Block 3 (351-600 kWh):
- Rate: 2.0361 R/kWh (rounded to 2.04 R/kWh, but we proceed with the provided result)
- Usage: 60 kWh (since 410 - 350 = 60 kWh)
- Cost: [tex]\( 60 \, \text{kWh} \times 2.0361 \, \text{R/kWh} = 122.166 \, \text{R} \)[/tex]

- Block 4 (>600 kWh):
- Usage: 0 kWh (since total usage is 410 kWh, which does not extend into this block)
- Cost: [tex]\( 0 \, \text{kWh} \times 2.4069 \, \text{R/kWh} = 0.0 \, \text{R} \)[/tex]

2. Total Cost Before VAT:

Adding the costs from each block:
[tex]\[ \text{Total Cost Before VAT} = 60.0 \, \text{R} + 432.0 \, \text{R} + 122.166 \, \text{R} + 0.0 \, \text{R} = 614.166 \, \text{R} \][/tex]

3. Calculating VAT:

VAT is charged at 15%. Therefore:
[tex]\[ \text{VAT Amount} = 614.166 \, \text{R} \times 0.15 = 92.1249 \, \text{R} \][/tex]

4. Total Cost Including VAT:

Adding the VAT amount to the total cost before VAT:
[tex]\[ \text{Total Cost Including VAT} = 614.166 \, \text{R} + 92.1249 \, \text{R} = 706.2909 \, \text{R} \][/tex]

Therefore, Mr. Masigo paid a total of 706.2909 R, including VAT, for his electricity usage during June 2020.

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