8.1.18 Leaving a Tip

If you go out to eat, you know that it is customary to leave a tip (gratuity) for the server based on the amount of your bill. 15% is considered typical, although many people agree that if you enjoyed the service, a tip of 20% is appropriate. [ Did you know that most U.S. wait staff are paid less than minimum wage, and that the main portion of their income comes from tips? They are also required to pay income tax on the gratuity they receive. ]

Video clip iconHow do you figure out how much to give as a tip? This video helps you to learn how to calculate a standard 15% tip quickly:

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Watch the video and then review your knowledge in the next activity.

Activity iconActivity: Leaving a Tip

Imagine you are at a restaurant, and you pay your bill with your debit card. You decide to tip about 15% on the $41.68 bill (which already included sales tax).

How much tip will you add, and what is the total cost of the meal with tip?

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Comment

You have many methods now to arrive at 15% of about $41.68. Can you do it with the method from the video? Don’t hesitate to make a rounded estimate to get started.

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Answer

If you decide to round the $41.68 differently from this sample solution, you may arrive at a slightly different overall amount. But, since you are not required to leave exactly 15% in tip, other results can be correct. To avoid mistakes, make sure the answer is reasonable. It is your decision whether you calculate the tip based on the entire bill amount or just on the cost of the food and not on the sales tax.

$41.68 can be rounded up to $42.00. Dividing by 10 gives you 10% of $42.00, which is $4.20. Multiplying by 2 creates 20% being $8.40. Did you catch what he did next? He is taking the average of the sum of these two dollar amounts. He can do this because the average of 10% and 20% is equation sequence open 10 plus 20 close percent divided by two equals 30 percent divided by two equals 15 percent.

Now do it with the money: equation sequence dollar times 4.20 plus dollar times 8.40 divided by two equals dollar times 12.60 divided by two equals dollar times 6.30 .

Lastly, dollar 42.00 postfix plus dollar 6.30 equals dollar 48.30.

The standard tip (15%) is about $6.30, and the total amount would be about $48.30. In such a situation, you probably will consider to round up to $49.00 or even $50.00 if the service was good (the latter coming close to a more generous 20% in gratuity).

If the averaging arithmetic is a little tricky, you can round the sums before doing it. For example, round $4.20 to $4 and $8.40 to $8. It’s easier to see that the average of those is dollar equation left hand side open four plus eight close divided by two equals right hand side dollar six, which is still reasonable for a tip.

8.1.17 Calculating Sales Tax

8.1.19 Online Shopping