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Difficulty: HardTaxes and Tips

A contractor is purchasing supplies for a project. He buys a power drill originally priced at $150.00\$150.00 and a set of drill bits originally priced at $50.00\$50.00. The drill is on sale for 30%30\% off, but the drill bits are sold at full price. If an 8%8\% sales tax is applied to the entire purchase after the discount is taken, what is the final total amount paid?

  1. A
    $171.00\$171.00
  2. B
    $156.24\$156.24
  3. $167.40\$167.40Answer
  4. D
    $151.20\$151.20

Answer

$167.40\$167.40
The correct amount is found by first calculating the 30%30\% discount on the $150.00\$150.00 drill, which is a $45.00\$45.00 reduction, making the drill $105.00\$105.00. Adding the full-price $50.00\$50.00 drill bits brings the subtotal to $155.00\$155.00. Finally, calculating the 8%8\% sales tax on the $155.00\$155.00 subtotal gives $12.40\$12.40. Adding the tax to the subtotal yields the final amount of $167.40\$167.40.

Step-by-Step Solution

1
Calculate the discount amount for the power drill.
$150.00×0.30=$45.00\$150.00 \times 0.30 = \$45.00
To determine how much will be reduced from the drill's original price.
2
Determine the sale price of the power drill.
$150.00−$45.00=$105.00\$150.00 - \$45.00 = \$105.00
To find the actual cost of the drill before tax.
3
Calculate the pre-tax subtotal for all purchased items.
$105.00 (drill)+$50.00 (bits)=$155.00\$105.00 \text{ (drill)} + \$50.00 \text{ (bits)} = \$155.00
The sales tax is applied to the combined cost of the discounted and full-priced items.
4
Calculate the sales tax on the subtotal.
$155.00×0.08=$12.40\$155.00 \times 0.08 = \$12.40
An 8% tax applies to the entire pre-tax subtotal.
5
Calculate the final total amount paid.
$155.00+$12.40=$167.40\$155.00 + \$12.40 = \$167.40
The final total must include both the purchase subtotal and the applied sales tax.

Key Concept

Calculating multi-step financial transactions involving partial-order discounts and subsequent aggregate sales tax.
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Topics

Taxes and Tips

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