Answered

Look at this monthly budget:

| Item | Budgeted |
|----------------|-----------|
| Net income | [tex]$600 |
| Total income | $[/tex]600 |
| Rent | [tex]$-300 |
| Train pass | $[/tex]-30 |
| Total fixed | [tex]$-330 |
| Food | $[/tex]-100 |
| Clothing | [tex]$-40 |
| Discretionary | $[/tex]-50 |
| Total variable | [tex]$-190 |
| Savings | $[/tex]80 |

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

A. [tex]$20
B. $[/tex]10
C. [tex]$40
D. $[/tex]30



Answer :

To determine how much Tokuji can increase his discretionary spending, let's follow a step-by-step method:

1. Determine the initial and new net income:
- Initial net income: \[tex]$600 - New net income: \$[/tex]650

2. Calculate the increase in net income:
- The increase in net income is [tex]$\$[/tex]650 - \[tex]$600 = \$[/tex]50[tex]$ 3. Determine the initial and new savings: - Initial savings: \$[/tex]80
- New savings: \[tex]$110 4. Calculate the increase in savings: - The increase in savings is $[/tex]\[tex]$110 - \$[/tex]80 = \[tex]$30$[/tex]

5. Calculate the amount available for increased discretionary spending:
- With the increase in net income and after allocating extra to savings, the amount that can be diverted to increased discretionary spending is [tex]$\$[/tex]50 (increase in net income) - \[tex]$30 (increase in savings) = \$[/tex]20[tex]$ So, the amount by which Tokuji can increase his discretionary spending is: \[\boxed{\$[/tex] 20}\]

Thus, the correct option is \$20.