Future Business Leaders of America (FBLA) Business Calculations Practice Test

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Dive into the FBLA Business Calculations Test. Sharpen your analytical skills with multiple-choice questions and gain insights with detailed explanations. Excel in your exams!

Practice this question and more.

Your company had a total revenue of $283,506.82, including sales tax. What was the total sales tax liability if the state tax is 7% and city tax is 2%?

$18,206.86
$23,408.82
$25,515.62
$5,201.96

The correct answer is: $25,515.62

To find the total sales tax liability from the total revenue, we first need to determine the combined sales tax rate. The state tax is 7% and the city tax is 2%, so the total sales tax rate is 9% (7% + 2%). Next, we can express the total revenue, which includes sales tax, in terms of the pre-tax revenue. Let’s denote the pre-tax revenue as $ P $. When sales tax is included, the total revenue can be expressed as: \[ Total Revenue = P + (P \times Total Tax Rate) \] This can also be written as: \[ Total Revenue = P(1 + Total Tax Rate) \] Substituting the total tax rate of 0.09 (9%) into the equation gives: \[ Total Revenue = P(1 + 0.09) = P \times 1.09 \] We know from the question that the total revenue is $283,506.82. Plugging this into the equation allows us to isolate $ P $: \[ 283,506.82 = P \times 1.09 \] To find $ P $, we divide both sides by