You own a restaurant and just negotiated a decrease in the cost of steaks by 25 cents a steak.You normally sell 300,000 steak dinners a year.Your business pays an average of 30 percent in income taxes.What is the annual tax cost of this increased efficiency?

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Quizplus · Accepted Answer

The savings from the cost decrease is 300,000 steaks * $0.25 = $75,000. The tax cost is 30% of the savings, which is $75,000 * 0.30 = $22,500.

You Own a Restaurant and Just Negotiated a Decrease in the Cost