A CA contractor buys $14,000 of taxable materials for a lump-sum job, and the applicable tax rate in the problem is 8.25 percent. What tax amount should be budgeted on those materials?
Correct Answer
B) $1,155.
Tax is material cost times tax rate: $14,000 x 8.25 percent = $1,155.
Why This Is the Correct Answer
Tax is material cost times tax rate: $14,000 x 8.25 percent = $1,155.
Why the Other Options Are Wrong
Option A: $825.
$825. is below the supported result for construction sales and use tax; it likely uses the wrong base, period, or account bucket.
Option C: $1,400.
$1,400. is above the supported result for construction sales and use tax; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $15,155.
$15,155. is above the supported result for construction sales and use tax; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Tax and material live in different drawers; Preparing Materials tells which opens.
Reference Hint
Study anchor (closed-book): memorize Construction sales and use tax from CSLB Law and Business Study Guide; California Department of Tax and. / California Sales and Use Tax Regulation 1521 construction contractors materials; know the rule or calculation trigger without relying on exam-room lookup.
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