Question

Firm A sold goods to firm B worth Rs. 100, firm B sold the same with some modifications to firm C for Rs. 160, firm C sold those goods for final consumption to firm D for Rs. 200. Calculate the value added by each firm.

Answer 1

We know that, 

Value added = value of output – intermediate consumption.

To check: Total value of output – total cost = total/gross value added. Thus, 

(100 + 160 + 200) – (0 + 100 + 160) = 200