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Question

Difficulty: MediumTaxes and Tips

A platoon leader is organizing a holiday banquet for their unit at a local restaurant. The initial food and beverage total is $400.00\$400.00. The restaurant offers a 15%15\% military discount on this total. A 5%5\% local sales tax and a 20%20\% gratuity (tip) are then applied. If both the tax and the gratuity are calculated based on the discounted total, what is the final overall cost of the banquet?

  1. A
    $440.00\$440.00
  2. $425.00\$425.00Answer
  3. C
    $481.25\$481.25
  4. D
    $428.40\$428.40

Answer

The final overall cost of the banquet is $425.00\$425.00.
The correct answer accurately determines the discount (60),subtractsittofindthenewsubtotal(60), subtracts it to find the new subtotal ( 340), calculates the tax (17)andtip(17) and tip ( 68) based on that new subtotal, and adds everything together (340+340 + 17 + 68)toreachthetotalof68) to reach the total of 425.00.

Step-by-Step Solution

1
Calculate the dollar amount of the military discount.
15%15\% of $400.00=0.15×$400.00=$60.00\$400.00 = 0.15 \times \$400.00 = \$60.00
The discount must be determined before calculating the new taxable subtotal.
2
Subtract the discount from the initial total to find the discounted subtotal.
$400.00−$60.00=$340.00\$400.00 - \$60.00 = \$340.00
This establishes the new base amount on which the tax and gratuity will be calculated.
3
Calculate the sales tax on the discounted subtotal.
5%5\% of $340.00=0.05×$340.00=$17.00\$340.00 = 0.05 \times \$340.00 = \$17.00
The problem states the 5%5\% tax is applied to the discounted total.
4
Calculate the gratuity (tip) on the discounted subtotal.
20%20\% of $340.00=0.20×$340.00=$68.00\$340.00 = 0.20 \times \$340.00 = \$68.00
The problem specifies the gratuity is also calculated based on the discounted total.
5
Add the discounted subtotal, tax, and gratuity to find the final cost.
$340.00+$17.00+$68.00=$425.00\$340.00 + \$17.00 + \$68.00 = \$425.00
Summing the adjusted base cost with all applicable fees gives the total amount due.

Key Concept

Taxes and Tips
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Topics

Taxes and Tips

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