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.