Question

The student store sells pencils that have a markup of 120 percent above their wholesale cost of $0.50 each. They also charge sales tax of 8 percent. What is the total cost of a pencil from the student store?

Answer 1

To calculate the total cost of a pencil from the student store, we need to first determine the selling price before tax and then add the sales tax.

1. **Calculate the markup amount:**
The wholesale cost of a pencil is $0.50. The markup is 120% of this cost.

\[
\text{Markup Amount} = \text{Wholesale Cost} \times \frac{\text{Markup Percentage}}{100} = 0.50 \times 1.20 = 0.60
\]

2. **Calculate the selling price before tax:**
The selling price (SP) before tax is the wholesale cost plus the markup.

\[
\text{Selling Price} = \text{Wholesale Cost} + \text{Markup Amount} = 0.50 + 0.60 = 1.10
\]

3. **Calculate the sales tax:**
The sales tax is 8% of the selling price.

\[
\text{Sales Tax} = \text{Selling Price} \times \frac{\text{Sales Tax Percentage}}{100} = 1.10 \times 0.08 = 0.088
\]

4. **Calculate the total cost:**
The total cost of the pencil including tax is the selling price plus the sales tax.

\[
\text{Total Cost} = \text{Selling Price} + \text{Sales Tax} = 1.10 + 0.088 = 1.188
\]

5. **Rounding to two decimal places:**
Because prices are typically rounded to the nearest cent, we round $1.188 to $1.19.

Thus, the total cost of a pencil from the student store is **$1.19**.