To determine why Mike's budget might be a problem, we need to analyze the expenses he has listed and see if any issues arise.
1. Calculate the Total Expenses:
- Housing: [tex]$420
- Food: $[/tex]168
- Transportation: [tex]$210
- Insurances: $[/tex]42
- Debts: [tex]$70
- Entertainment: $[/tex]224
- Clothing: [tex]$70
- Savings: $[/tex]70
- Medical: [tex]$56
- Miscellaneous: $[/tex]70
Summing these expenses gives us:
[tex]\[
420 + 168 + 210 + 42 + 70 + 224 + 70 + 70 + 56 + 70 = 1400
\][/tex]
2. Compare Total Expenses with Net Income:
- Mike's net spendable income is [tex]$1400.
- His total expenses add up to $[/tex]1400.
Since his total expenses exactly match his net income, he is not spending more than he is earning. Therefore, he will not have any money left over, and he will be able to cover all his listed expenses. Thus, option A, "Mike will spend more money than he is earning," is not correct.
3. Evaluate Adequacy for Food or Medical Expenses:
- Food: [tex]$168
- Medical: $[/tex]56
Both amounts are within reasonable ranges for a monthly budget, so option B, "Mike does not have enough money budgeted for food or medical expenses," is not the case here.
4. Assess Use of Minimum Recommended Percentages:
The expenses provided do not indicate that Mike is using minimum recommended percentages for any category, and since his total expenses match his income, this point is not relevant. Therefore, option C, "Mike is using the minimum recommended percentages for food, housing, and transportation. The costs are likely to exceed the expenses in each category," is not correct as well.
5. Check if All Money is Budgeted:
- Since Mike's total expenses sum to $1400, exactly equal to his net income, he has budgeted all of his money without leaving any surplus unbudgeted. This means he will not have any extra money at the end of the month.
Given that Mike has accounted for his entire income in his budget and there is no extra money leftover that he would end up spending, option D, "Mike has not budgeted all of his money. He will find that he has extra money at the end of the month, which will end up being," is inapplicable.
The correct result matches option D, indicating there is no problem with his budget wherein he would have extra money at the end of the month.
