Real-Life Math -- Solution
In a few hours you're meeting a client who operates a beverage distribution plant. He wants to know this week's prices for tea and coffee. "You're always working in percentages to figure out total costs," says Stunder. "You also have to keep in mind that every country has different prices and policies about what products are duty-free."
These are prices you have calculated:
Tea
Your client has ordered 125 crates of tea at $32 per crate. The transportation cost of the tea is $535. On top of the total value of the product, including transportation, you calculate the 10 percent customs tax and the 12 percent duty costs.
125 x $32 = $4,000
$4,000 + $535 = $4,535
$4,535 x 0.10 = $453.50
$4,535 x 0.12 = $544.20
The total cost for the tea will be $4,535 (tea and transportation) plus $453.50 (customs) and $544.20 (duty) = $5,532.70
Coffee
This same client has ordered 145 bags of coffee at $55 per bag. The transportation cost of the coffee is $321. In this instance, the customs tax applies to both the price of the coffee and the transportation costs, but the duty costs only apply to the price of the coffee and not to the transportation costs.
145 x $55 = $7,975
$7,975 + $321 = $8,296
$8,296 x 0.10 = $829.60
$7,975 x 0.12 = $957 (transportation is duty free)
The coffee will cost $8,296 (coffee and transportation) plus $829.60 (customs) and $957 (duty) = $10,082.60
The total supply of coffee and tea will cost the company $5,532.70 + $10,082.60 = $15,615.30