Question

Maureen has a net spendable income of $2,100 per month. She sets up the following transportation budget for herself. Transportation (15% - 20%) 350

a. Car payments 150
b. Gas/Oil 120
c. Insurance 60
d. License/Registration 2
e. Taxes 5
f. Maintenance/Repair 50
what has she done wrong?


A: She budgeted more than the maximum recommended amount of money for transportation.

b: She has more money in the main category than she budgeted for in the subcategories.

c: She has more money in the subcategories than she budgeted for in the main category.

d: She budgeted less than the minimum recommended amount of money for transportation.

Answer 1

Option C is correct.

Step-by-step explanation:

Given information is :

Net monthly spendable income = $2100

Transportation budget set up = $350 that lies between 15 to 20 percent of the net spendable.

Now adding her subcategories budget we get:

`150+120+60+2+5+50=387`

But Maureen has set $350 for this category. It clearly shows that the subcategories have more budget. So, either Maureen can increase her main category budget(this option is not given) or she can cut few of her subcategory budget to fall under $350.

Hence, Option c: She has more money in the subcategories than she budgeted for in the main category - is correct.

Answer 2

c. She has more money in the subcategories than she budgeted for the main category

Step-by-step explanation:

First, let's check the budget she set for the main category:

We are given that Maureen has net spendable income of $2,100.

The minimum amount she budgeted for transportation is 15% which can be calculated as follows:

Minimum budget for transportation = 15% * 2,100 = 0.15 * 2,100 = $315

Then, let's check her subcategories:

$150 for car payments, $120 for gas/oil, $60 for insurance, $2 for licence/registration, $5 taxes and $50 for maintenance/repair

This means that:

Minimum amount she will spend = 150 + 120 + 60 + 2 + 5 + 50 = $387

Now, let's compare:

Minimum budget set by Maureen is $315

Minimum amount she needs to spend on subcategories is $387

It is obvious that the minimum amount she needs is higher than the minimum budget she set for transportation, i.e., she has more money in subcategories than she budgeted in the main category.

This means that she needs either to increase her minimum budget for transportation or to lower the minimum amount she needs to spend.

Hope this helps :)