2-6 Sales Tax, Tips, and Markup

Sales Tax, Tips, and Markup

Chapter 2 Lesson 6

What is sales tax??

• Sales tax is an additional amount of money charged on items that people buy!

• Fun Fact 1: Pennsylvania's sales tax of 6% is considered a medium rate...

• Fun Fact 2: Tennessee has the highest sales tax rate of 9.53% (Updated Jan. 15 2020!)

Example #1

• Drew wants to buy exercise equipment that costs $140 and the sales tax is 5.75%. What is the total cost of the equipment?

• Step 1: Find the sales tax!! To do this, we multiply the decimal form of the % by the cost of the item

• $140 * 0.0575 = 8.05

• Step 2: Add the sales tax to the cost of the item!

• $140 + $8.05 = $148.05

• So the total cost is $148.05 after sales tax!

Moving onto Tips/Gratuity

• Tips or Gratuity is a small amount of money in return for a service.

• The total price is the regular price of the service PLUS the tip!

• Fun Fact: It is common to tip your servers 20%... just saying! :)

Example #2 - Tips

• A customer wants to tip 15% on a restaurant bill that is $35. What will be the total bill with the tip?

• Step 1: Find the amount to tip! We do this by taking the decimal from of the % and multiplying it by the bill amount.

• $35 * 0.15 = $5.25

• Step 2: Add the tip to the total of the bill!

• $35 + $5.25 = $40.25

• So the total bill is $40.25

Example #3 - Markup!

• A markup is a percent INCREASE on an item!

• A store buys a phone for $600 and wants to sell it with a markup of 35%. What is the selling price of the phone?

• Step 1: Find the amount of markup (take the money amount and multiply it by the decimal of the percentage)

• $600 * 0.35 = $210

• Step 2: ADD the amount of markup to the original price.

• $600 + $210 = $810 selling price!

Multiple Choice

What is the total cost of a sweatshirt if the regular price is $42 and the sales tax is 5.5%?

• $44.31

• $39.69

Multiple Choice

Scott wants to tip his taxicab driver 20%. If his commute costs $15, what is the total cost?

• $18

• $12

Multiple Choice

What is the cost of a flashdrive that a store got for $5.75 with a 20% markup?

• $6.90

• $1.15