Question

A not-for-profit nursing home has total expense of $20 million. Sales tax in the state is 7%. Expenses are broken down into salaries ($12 million), supplies ($6 million), and other miscellaneous not subject to tax ($2 million). The benefit received by the nursing home from the sales tax exemption is?

Answer 1

1.4 million

Step-by-step explanation:

Given that,

Total expense = $20 million

Sales tax in the state = 7%

Expenses are broken down into:

salaries = $12 million

supplies = $6 million

Other miscellaneous not subject to tax = $2 million

Benefit received by the nursing home from the sales tax exemption:

= Total expenses × Sales tax in the state

= 20 million × 0.07

= 1.4 million