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Sales Tax, Discounts, & Commission
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Sales Tax Calculated based on the cost of the item or service you are purchasing Is a percentage of the original cost
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Finding Sales Tax To find sales tax, multiply the percentage of tax by the original price Example: Original Price = $10; Sales tax = 9% 10 x .09 = $0.90 To find the price after tax, add the sales tax to the original price. Price after tax = $ = $10.90
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Example You buy a car for $20,000 and pay 5 % in tax. How much is the tax? Tax = 20,000 x 5% = 20,000 times 0.05 Tax = 20,000 x 0.05 = 1,000 dollars. So, the cost with tax is $20,000 + $1000 = $21,000
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Commission Commission is a fee which a salesperson would receive upon completion of a sale. Commission can be based on either the Mark- up or the sales price. ONLY BASE COMMISSION ON MARK-UP IF THE INSTRUCTIONS SAY SO. It is a motivational system of payment designed to encourage sales staff to sell more We calculate commission similar to how we calculate sales tax
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example Sally works in a perfume shop. For every bottle of perfume she sells, she receives 2.5% commission. One day she made $450 in sales. How much commission did she make?
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example Sally works in a perfume shop. For every bottle of perfume she sells, she receives 2.5% commission. One day she made $450 in sales. How much commission did she make? $450 x 2.5% = $450 x 0.025 = $11.25 Therefore, Sally makes $11.25 off $450 of perfume sales.
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Markups A markup is the difference between the buying price (the cost for a store to buy an item) and the selling price This is called a “markup” Markups are calculated like tax and added to the buying price.
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Example If the original price on a computer is $500 and is marked up by 45%, how much is the selling price of the computer? 500 x .45 = 225 Selling price = = $725
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Example The buying price on a car is $4,000. A dealership has a markup that is 60%. What is the selling price of the car? If Jake sells a car and receives 20% commission, how much money does he earn?
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Profit Profit = how much a business makes off of a sale
To find profit, you need to subtract the Markup by commission. If there is no commission, the markup is the profit.
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Example Buying price = $60 Markup = $108 Commission = $50
Profit = Markup – Commission Profit = 108 – 50 = $58
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