UNIT 8 ACTIVITY 2

You Decide: Computing Sales Tax

It's time to plan for your weekly trip to your local grocery store, and because you are a student, you need to assure yourself that you will not exceed your budget of $25/week for food and household items.

The store clearly marks its prices, so it is obvious what each item on your list costs; however, you need to calculate the sales tax for the purchases you plan to make so that you have enough money to pay for everything. Keep in mind that for the purposes of this activity, certain items, specifically food, are NOT subject to sales tax in your area.

Use the following information to compute the total cost of your shopping trip.

Here are the items you plan to purchase:

Bananas $2.25

Milk $2.25

Bread $2.75 (2 loaves)

Eggs $1.75

Paper towels $1.50

Dishwashing liquid $3.50

Sponges $3.25

Cloth dish towels $4.50

For this activity, you need to calculate the final cost of your shopping trip and identify which items you can afford to take home. As part of your decision, make sure that you apply the correct tax rate. Assume that the combined state and local tax where you live is 7.8% and answer the following questions in complete sentences. Please show your work and round to the nearest penny.

What was the total cost of the items, including sales tax on taxable items?

How much are you over OR under budget?

If you are over budget, what item would you remove from the list in order to fall safely within your budget but still get closest to the total amount you have to spend?