Concept

Tips, mark-ups, and taxes are all percentages of the original price that are then added to the original price. 
Wholesale Price: what a store pays for an item.
Mark-up: an amount of money the store adds to its cost of an item.
Selling Price: the price of an item before taxes. Wholesale price + mark-up.
Sales Tax: an additional amount of money charged on items purchased.
Tip: (gratuity) a small amount of money in return for a service.
Cost of the item: is selling price + tax
Final Cost = wholesale price + mark-up + tax + tip

Rules

Finding the cost of the tip, mark-up, or tax requires the same procedure. 
Change the percentage to decimal form and multiply by the given price.

To Calculate FINAL COST (wholesale price + mark-up + tax + tip):

1. Find the selling price if necessary
Selling price = wholesale price + markup
Selling price = (100% + % mark-up) × wholesale price

2. Calculate Cost of item
Cost of item= Selling price + tax
Cost of item = (100% + % tax) × selling price

3. Calculate Final Cost
Final Cost = Cost of item + tip
Final Cost = (100% + % tip) × Cost of item

Change all percents to decimal form before multiplying.

Example

Calculate the tax if the rate is 5.5% and the item costs $14.56.

Solution

Tax = Tax rate × price

5.5% × $14.56
0.055 × $14.56
$0.80

Pre-requisite Skills

 Finding percentage of quantities (6.8.4)