A Woman Owns a Small, Cash-Only Business in a State

question 90

Short Answer

A woman owns a small, cash-only business in a state that requires her to charge 6% sales tax on each item she sells. At the beginning of the day, she has $250 in the cash register. At the end of the day, she has $1,098 in the register. How much money should she send to the state government for the sales tax she collected during the day? $__________

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Definitions:

Split-off Point

In process costing, the stage in production where multiple products emerge from a single process and continue to be processed further or sold as is.

Joint Production Costs

Costs that are incurred up to the split-off point in a process that produces multiple products.

Absorption Costing

This accounting style integrates all facets of manufacturing costs—direct materials, direct labor, and both variable and fixed overheads—into the comprehensive cost of a product.

Markup

The amount added to the cost of goods to cover overhead and profit, determining the selling price.