Your Algebra Teacher Was Right :(

Who knew that grumpy lady was right?  The one you used to make fun of.  The one you drew less than complimentary pictures of.  When your Algebra teach would say “You’re going to need this stuff later in life” you’d mumble to your buddy in the seat next to you “Get over yourself.”  Well, time to eat some crow, my friend.  Because she was right.

Case in point: Sales Tax Calculation when “Tax is Included”

It’s always convenient to sell products in round, easy to hand-over, currency denominations, right?  Of course.  Asking a customer to fork over a five, ten, or twenty dollar bill makes life a lot easier for everyone.  But how do you calculate the sales tax when “it’s included?”

After thinking through it for a minute, I figured it out.  I was impressed that I’d actually remembered.  And I was humbled by the fact that Miss Jacobson actually taught me something when I gave her nothing but flack.  Working through the problem on my white board helped:

Known variables: Total of Sale (example $20); Tax Rate (example 9.25%)
Unknown variable (x): Product or Service Price before Tax

Equation and Work:
Step 1: x + .0925x = $20
Step 2: x (1 + .0925) = $20
Step 3: x = $20/(1 + .0925)
Step 4: x = $20/1.0925 = $18.31
Step 5: Tax = $18.31 * .0925 = $1.69

So it looks like she was right after all.  I am going to need some of what I learned in school.

Advertisements

About bbluford
I am an executive finance professional with a love for process and application development (MS Access, Excel, Quickbooks), mostly as it relates to Accounting and Business Functions. I also love to write and share ideas with other people in this world. I'm an admitted Gym Rat who works out excessively. The best summation of me is that I love to teach and to learn.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: