4.04 Sales tax, commissions and tips
Introduction
Other ways that percentages are commonly used are when calculating the proper tip to leave the waitstaff at a restaurant, calculating the amount of sales tax we will need to pay for purchasing an item, and finding the amount of commission paid to an employee based on how much they sell. Let's look at how to find each of these using what we've learned about percent increase.
Tips
A tip is an amount of money left for the staff, in addition to paying the bill, as a sign that we appreciate good service. Tips are common in the service industry, but in other sectors like government receiving a tip can be considered illegal. So, it is important to know the customary amount to tip for different services and who we should not offer a tip to.
This image below displays the tipping customs of many countries around the world. You can see that tips vary from 0 to 20\%.
We can use what we already know about finding a percentage, to calculate the tip. Let's look at an example.
Examples
Example 1
Sharon has finished her meal at a restaurant, but received bad service. She will only be leaving a 10\% tip. Help her calculate the tip if the meal, before sales tax, came to \$36.60.
A tip is an amount of money left for the staff, in addition to paying the bill, as a sign that we appreciate good service.
Sales tax
In most of the United States, sales tax is added on to the marked price of an item at the point of sale. This tax is an extra amount that is added to the marked price of goods or the stated price of a service.
In some countries, sales taxes is already included in the marked price ticket. So, similar to being aware of tipping customs, it is useful to know how sales tax is collected where we are making a purchase.
Sales taxes in the U.S. can range from state to state and can be between 4\% in Guam and 12\% in Arkansas. Sometimes particular goods or services like hotels, alcohol or cigarettes may be subject to higher taxes than other items.
Examples
Example 2
The sales tax on clothing in Indiana is 7\%.
Calculate how much tax you need to pay on a dress if it costs \$40.60 before tax.
Find the total amount to pay for the dress.
Sales tax is an amount to be paid in addition to the marked price of goods or the stated price of a service, and is added on to the marked price, at the point of sale.
Commission
A commission is a typical payment method for salespeople selling items like furniture, cars or real estate. Commission is usually paid as a percentage of an employee's total sales.
Commission payments can make up an employee's entire income, or they can be paid on top of a regular income, called a retainer.
Examples
Example 3
Han is paid a commission of 3\% of the value of trucks sold in excess of \$2100. Calculate his income if he sells trucks to the value of \$6600.
Commission applies the concept of percentage increase, and is paid to an employee based on how much they sell.