For its fleet of trucks, Overland Transport, Inc., purchased 580 tires rated at 50 pounds each. The tires had a retail price of $85 each. The sales tax in 4.5%, and the federal excise tax is $0.15 per pound.
A. What are the amount of sales tax per tire and the total sales tax?
B. What are the amount of federal excise tax per tire and the total excise tax?
C. What is the total purchase price of the tires>
To solve this problem, we will need to calculate the sales tax and federal excise tax per tire, as well as the total purchase price of the tires.
A. Sales Tax:
1. Calculate the amount of sales tax per tire:
Sales Tax per Tire = Retail Price per Tire * Sales Tax Rate
Sales Tax per Tire = $85 * 4.5% = $3.825 (rounded to the nearest cent)
2. Calculate the total sales tax for all tires:
Total Sales Tax = Sales Tax per Tire * Number of Tires
Total Sales Tax = $3.825 * 580 = $2,215.50
B. Federal Excise Tax:
1. Calculate the amount of federal excise tax per tire:
Federal Excise Tax per Tire = Weight of Tire * Excise Tax Rate
Weight of Tire = 50 pounds
Excise Tax Rate = $0.15 per pound
Federal Excise Tax per Tire = 50 pounds * $0.15/pound = $7.50
2. Calculate the total excise tax for all tires:
Total Excise Tax = Federal Excise Tax per Tire * Number of Tires
Total Excise Tax = $7.50 * 580 = $4,350
C. Total Purchase Price:
1. Calculate the total retail price of all tires:
Total Retail Price = Retail Price per Tire * Number of Tires
Total Retail Price = $85 * 580 = $49,300
2. Calculate the total purchase price including sales tax and excise tax:
Total Purchase Price = Total Retail Price + Total Sales Tax + Total Excise Tax
Total Purchase Price = $49,300 + $2,215.50 + $4,350 = $55,865.50
Therefore, the answers to the questions are:
A. The amount of sales tax per tire is $3.825, and the total sales tax is $2,215.50.
B. The amount of federal excise tax per tire is $7.50, and the total excise tax is $4,350.
C. The total purchase price of the tires is $55,865.50.