Assume you have a 5 percent sales tax on the price of a banquet, a 15 percent gratuity charge, and a 5 percent over/under policy. Explain to your client the cost per person of a banquet selling for $20 as well as the total cost of that banquet assuming a guarantee of 1,000 people. Include in your explanation the over-under policy.

Answer:

1. $5

2. $5,000

Explanation:

1. For cost per person:

First, sum up all the percentage cost;

Banquet selling price=$20

a. Sales tax=5% of banquet price= 5/100 *20= $1

b. 15 percent gratuity charge=15/100 *20= $3

c. 5 percent over/under policy=5/100 *20=$1

Total cost =$5

2. For guaranteed 1000 persons:

Banquet selling price= $20 *1000= $20,000

a. Sales tax=5% of banquet price= 5/100 *20= $1000

b. 15 percent gratuity charge=15/100 *20= $3000

c. 5 percent over/under policy=5/100 *20=$1000

Total cost =$5000