Question

Look at this monthly budget. 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?

1) 20
2) 40
3) 30

Answer 1

To find the increase in discretionary spending after Tokuji's income increases and he adjusts his savings, subtract the original savings from his current income to get the original discretionary spending, and then subtract the new savings from the new income to find the new discretionary spending. The difference between the new and original discretionary spending will provide the increase.

Step-by-step explanation:

The student is looking at a monthly budget and considering the impact of an increase in monthly net income to $650. If the savings increase to $110 a month, we must determine how much the discretionary spending can be increased.

We firstly subtract the original savings from the current income to determine the original discretionary spending. Then, we find the new discretionary spending by subtracting the new savings from the new income. The difference between the new and original discretionary spending gives us the increase in discretionary spending.

To put into a formula, if I is income, S is savings, and D is discretionary spending, the formula would look like: D_new = I_new - S_new - (I_original - S_original). In Tokuji's case, this would be: D_new = 650 - 110 - (I_original - original_savings).

Since we are not provided with the original income and original savings, we cannot compute a numerical answer. However, this is the method Tokuji would use to calculate how much he can increase his discretionary spending once he knows his original income and savings.