Question

below is a graph of the murphys’ annual expenses. if the murphys’ gross annual household income is $85,420 how much will they pay in federal taxes?
murphys’ annual expenses
pie chart with categories: federal taxes 24%, state/local taxes 10%, housing and household 27%, food 7%, medical care 5%, transportation 3%, recreation 4%, clothing 5%, other 9%
options:
a. $3,559.17
b. $8,542.00
c. $20,500.80
d. $29,897.00

Explanation:

Step1: Identify Federal Taxes Percentage

From the pie graph, Federal Taxes account for 24% of the annual expenses (and thus, we assume this percentage applies to the gross income for federal tax calculation here).

Step2: Calculate Federal Tax Amount

The gross annual income is $85,420. To find 24% of this, we use the formula: \( \text{Tax Amount} = \text{Income} \times \text{Percentage} \). Converting 24% to a decimal (0.24), we calculate \( 85420 \times 0.24 \).

First, calculate \( 85420 \times 0.2 = 17084 \) and \( 85420 \times 0.04 = 3416.8 \). Then, add these two results: \( 17084 + 3416.8 = 20500.8 \).

Answer:

c. $20,500.80