Which statement correctly describes how sales tax is calculated?

• A. Multiply price by tax rate
• B. Add a fixed amount
• C. Multiply price by discount rate
• D. Multiply price by service charge

Answer: (A)

Sales tax is found by applying the tax rate to the item's price. In other words, you multiply the price by the tax rate (expressed as a decimal or percentage). For example, if something costs 50 and the tax rate is 8%, the tax would be 4 and the total would be 54. This differs from adding a fixed amount, which wouldn’t change with price, or multiplying by a discount rate, which reduces the price, or multiplying by a service charge, which is a separate fee. Tax rules vary by location, so rates and rounding can differ, but the basic method is always price times tax rate.