Question

A state gets its money from a state lottery, a property tax, a sales tax of 5%, and an excise tax. This year it projects that it will receive $28 million from the state lottery, $36 million from the property tax, and $12 million from the excise tax. If the state needs $100 million to cover its expenses, how many dollars worth of taxable items must be purchased in the state this year for the state to break even?

A. $480,000,000
B. $120,000,000
C. $24,000,000
D. $1,200,000

(Apex)

Answer 1

A. $480 000 000

Explanation:

Lottery = $ 28 million

Property tax = 36 million

Excise tax = 12 million

Income = 76 million

Less expenses = 100 million

Shortfall = $ 24 million

The state must make up $24 million in excise tax to break even.

Tax =Tax rate × sales

`\text{Sales} = \frac{\text{tax}}{\text{tax rate}} = \frac{\text{24 million}}{0.05}= \textbf{\$480 million}\\\\\boxed{\textbf{\$480 million}} \text{ worth of taxable items must be purchased for the state to break even}`