Question

A grocery store receipt shows 5% state tax due on laundry detergent and a flower bouquet. Does it matter whether the tax is calculated on each separate item or the total cost? Explain.

Answer 1

If the receipt shows both items it does matter, if you simply calculate each its like your putting 10% tax on it.

Answer 2

It does not matter whether the tax is calculated on each separate item or the total cost.

Explanation:

Lets check both the conditions by taking 2 items.

Lets suppose a person buys laundry detergent for $4.50 and flower bouquet for $5.25

Condition 1: If 5% tax is deducted separately on both items:

Cost of laundry detergent becomes after tax =
`0.05*4.50=0.225`

=
`4.50-0.225=4.275`

Cost of flower bouquet becomes =
`0.05*5.25=0.2625`

=
`5.25-0.2625=4.9875`

So, total tax deducted is =
`0.225+0.2625`= $0.4875

Condition 2: If tax is deducted on whole amount.

Cost of both the items =
`4.50+5.25` =$9.75

5% tax on 9.75 is =
`0.05*9.75` = $0.4875

Hence, we can see that in both the conditions the tax is same that is $0.4875

So, it does not matter whether the tax is calculated on each separate item or the total cost. The tax remains the same.