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Question

Difficulty: HardTaxes and Tips

An event planner organizes a retirement banquet. The standard cost for the food and beverage package is $500. The venue provides a 15% preferred client discount. A local sales tax of 8% is charged on the discounted price. In addition, an automatic gratuity of 20% is applied, which is also calculated based on the discounted price before tax. What is the total final cost of the banquet, in dollars?

Answer:Total final cost: $【544】

Answer

544
The final total is found by first applying the 15% discount to the original 500cost,yieldingadiscountedbaseof500 cost, yielding a discounted base of 425. Both the 8% sales tax (34)andthe2034) and the 20% gratuity ( 85) are calculated using this 425base.Addingthediscountedbaseprice,thetax,andthegratuitygivesafinaltotalof425 base. Adding the discounted base price, the tax, and the gratuity gives a final total of 544.

Step-by-Step Solution

1
Calculate the amount of the discount.
$75
The venue provides a 15% discount on the original $500 cost (0.15 × 500 = 75).
2
Determine the discounted price of the package.
$425
Subtract the discount amount from the original cost (500 - 75 = 425).
3
Calculate the sales tax.
$34
The 8% tax is charged on the $425 discounted price (0.08 × 425 = 34).
4
Calculate the gratuity.
$85
The 20% gratuity is also calculated based on the $425 discounted price (0.20 × 425 = 85).
5
Sum the components to find the total final cost.
$544
Add the discounted base price, the sales tax, and the gratuity together (425 + 34 + 85 = 544).

Key Concept

Calculating sequential percentages, including applying taxes and tips to a specific post-discount base amount.
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Topics

Taxes and Tips

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