Question

Next month, Tokuji's monthly net income will increase to $650. If he increases his savings to $110 a month, how much can he increase his discretionary spending

Answer 1

The correct answer on Edg is A ($20)

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Answer 2

Tokuji can increase his discretionary spending by $20.

This condition can be applied if his fixed and variable cost remain in the previous state except the discretionary spending. Tokuji still have $180 after his new income attributed into every fixed and variable cost, except the discretionary spending ($180 = $650 - $300 - $30 - $100 - $40). The remaining amount still can be attributed to $110 saving and $70 of the discretionary spending. Then, there would be an increase amounting $20 for the discretionary income comparing to the previous amount.