Question

Monthly Budget
Budgeted Amount
Actual Amount
Income
Wages

$1000

$850
Expenses
Car - gas, insurance
Food & Personal Items
Cell Phone
College Savings
Recreation
Clothes

$300
$200
$75
$200
$75
$85

$300
$220
$75
$200
$80
$60
Net Income
$65


What is the actual net income for the month? What, if any, changes could have been made to the actual amounts this month to keep the actual net income at a positive value?
a.
The actual net income for the month is -$85. Less money could have been spent on food, recreation and clothes.
b.
The actual net income for the month is $85. No changes necessary.
c.
The actual net income for the month is -$85. No changes necessary.
d.
The actual net income for the month is $85. Less money could have been spent on food, recreation and clothes.

Answer 1

Actual net income = 850 (income) − 935 (expenses) = −$85.

You would need to reduce spending or increase income by $85 to be positive. Cutting food and recreation (or earning an extra $85) would do it. So the best choice is (a).