122k views
2 votes
Use the budget information for

Laura Shannon for Exercises 5-11.
5. The Consumer Credit Counseling
Service suggests that the monthly
food budget be between 15-30%
of income.
a. What is Laura's total monthly
food bill including dining
out?
b. What percent of her income is
spent on food?
c. Is Laura below, in, or above the
recommended interval?
5. Examine Laura's non-monthly
expenses.
a. Which month has the greatest
expenses?
b. How might Laura prepare for
those expenses?
Laura's Financial Report
Income
Teacher, monthly after-tax income: $5,000
Tutor, monthly after-tax income: $1,200
Monthly Expenses
Rent
Car loan
Electricity
Sanitation
Cable/Internet
$2,200
$180
$80
$50
$40
$200
$200
Dining out
Gasoline
Water
$40
Renter's insurance $30
Debt reduction
$200
Groceries
Personal loan
Land line phone
Auto insurance
$60
$70
$400
$250
$80
Medical insurance $60
Entertainment $250
Savings
College loan
Cell phone
Non-Monthly Expenses
Medical: $250 in April, $250 in September
Auto-related: $400 in October
$600
$100
Home-related: $250 in February, $250 in November
Life insurance: $110 in April, August, December
Tuition: $2,000 in May (summer) and August (fall)
Vacation: $800 in July
Gifts: $250 in March and December
Contributions: $10 each week of the year
Repairs: $280 in October
Taxes: $1,500 in January and September

1 Answer

5 votes

Answer:

a. To calculate Laura's total monthly food bill, we need to add up her spending on groceries and dining out. According to the budget information, Laura spends $60 on groceries and $40 on dining out. So, her total monthly food bill is $60 + $40 = $100.

b. To find the percent of Laura's income spent on food, we need to divide her total monthly food bill by her monthly after-tax income and then multiply by 100. Laura's monthly after-tax income is $5,000 + $1,200 = $6,200. So, the percent of her income spent on food is ($100 / $6,200) * 100 = 1.61%.

c. The Consumer Credit Counseling Service suggests that the monthly food budget should be between 15-30% of income. In Laura's case, her percent of income spent on food is 1.61%, which is below the recommended interval. Laura is spending a lower percentage of her income on food compared to the recommended range.

5. To examine Laura's non-monthly expenses, we need to look at the amounts for each category and determine which month has the greatest expenses.

a. From the provided information, we can see that Laura has non-monthly expenses in various categories, such as medical, auto-related, home-related, life insurance, tuition, vacation, gifts, contributions, repairs, and taxes. To determine the month with the greatest expenses, we need to find the category with the highest total amount. From the given information, we can see that the auto-related expenses in October amount to $400, which is the highest compared to the other categories.

b. To prepare for those expenses, Laura can start saving or budgeting a specific amount each month towards those non-monthly expenses. By setting aside a portion of her income each month, she can build up a fund to cover those expenses when they occur. This can help her avoid financial stress and ensure she has enough money when the expenses arise.

User Martin Moore
by
8.2k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.