Examine the following budget: Monthly Budget Budgeted Amount Actual Amount Income Wages Savings Interest $1150 $25 $900 $25 Expenses Rent Utilities Food Cell Phone Savings for Car $400 $100 $250 $75 $200 $400 $80 $200 $75 $200 Net Income $30 What is the actual net income for the month? What, if any, changes would have improved the budget for the month?
Answer
A
The actual net income for the month is -$30. No changes to the budget are necessary.
B
The actual net income for the month is $30. No changes to the budget are necessary.
C
The actual net income for the month is $30. More money could have been spent on food.
D
The actual net income for the month is -$30. Less money could have been spent on food.
Explanation
Actual income was $900 in wages plus $25 in interest, or $925. Actual expenses totaled $400 + $80 + $200 + $75 + $200 = $955, so the actual net income was $925 − $955 = −$30. Spending less on food would have reduced expenses and improved the budget, so the best choice is “The actual net income for the month is −$30. Less money could have been spent on food.”
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