Answer :
To identify the simplest change that can boost savings, we need to compare the budgeted and actual expenses and understand their impact on the overall savings.
We'll start by examining the given monthly budget closely.
Income:
- Budgeted: [tex]$400.00 - Actual: $[/tex]375.00
Fixed Expenses:
- Rent:
- Budgeted: [tex]$200.00 - Actual: $[/tex]200.00
- Bus pass:
- Budgeted: [tex]$20.00 - Actual: $[/tex]20.00
- Total fixed expenses:
- Budgeted: [tex]$220.00 - Actual: $[/tex]220.00
Variable Expenses:
- Food:
- Budgeted: [tex]$75.00 - Actual: $[/tex]125.00
- Discretionary:
- Budgeted: [tex]$30.00 - Actual: $[/tex]50.00
- Total variable expenses:
- Budgeted: [tex]$105.00 - Actual: $[/tex]175.00
Savings:
- Budgeted: [tex]$75.00 - Actual: -$[/tex]20.00
### Analysis of Differences
When we compare the budgeted amounts with the actual amounts, we notice the following:
- The income was less by [tex]$25.00 (`$[/tex]400.00 - [tex]$375.00`). - The food expenses increased by $[/tex]50.00 (`[tex]$125.00 - $[/tex]75.00`).
- The discretionary expenses increased by [tex]$20.00 (`$[/tex]50.00 - [tex]$30.00`). Given these discrepancies, let's discuss options one by one: 1. Add to fixed expenses: - Adding to fixed expenses will further decrease savings, which is not a desirable option. 2. Decrease food expenses: - Actual food expenses were $[/tex]125.00, exceeding the budget by [tex]$50.00. If we can reduce food expenses back to the budgeted $[/tex]75.00, we would save an additional [tex]$50.00 compared to the current spending. 3. Reduce rent payments: - Rent payments are already at a fixed $[/tex]200.00, both in the budget and actual amounts. Adjusting rent might not be feasible or practical and generally requires significant lifestyle changes which may not be simple or immediate.
4. Increase total income:
- Although increasing income is an option, it might not be the simplest or most direct method to increase savings immediately as it may involve finding additional sources of income or negotiating a raise.
### Conclusion
To produce more savings next month with the simplest change, the best approach is to decrease food expenses to the budgeted amount. This is practical and directly affects the savings:
- Savings Improvement: [tex]$50.00 - New Savings: Applying this adjustment, the total new savings can be calculated as: \[ \text{Current savings (Actual)} + \text{Savings Improvement} = -\$[/tex]20.00 + \[tex]$50.00 = \$[/tex]30.00 \]
Therefore, the simplest change that can be made to the budget to produce more savings next month is to decrease food expenses.
We'll start by examining the given monthly budget closely.
Income:
- Budgeted: [tex]$400.00 - Actual: $[/tex]375.00
Fixed Expenses:
- Rent:
- Budgeted: [tex]$200.00 - Actual: $[/tex]200.00
- Bus pass:
- Budgeted: [tex]$20.00 - Actual: $[/tex]20.00
- Total fixed expenses:
- Budgeted: [tex]$220.00 - Actual: $[/tex]220.00
Variable Expenses:
- Food:
- Budgeted: [tex]$75.00 - Actual: $[/tex]125.00
- Discretionary:
- Budgeted: [tex]$30.00 - Actual: $[/tex]50.00
- Total variable expenses:
- Budgeted: [tex]$105.00 - Actual: $[/tex]175.00
Savings:
- Budgeted: [tex]$75.00 - Actual: -$[/tex]20.00
### Analysis of Differences
When we compare the budgeted amounts with the actual amounts, we notice the following:
- The income was less by [tex]$25.00 (`$[/tex]400.00 - [tex]$375.00`). - The food expenses increased by $[/tex]50.00 (`[tex]$125.00 - $[/tex]75.00`).
- The discretionary expenses increased by [tex]$20.00 (`$[/tex]50.00 - [tex]$30.00`). Given these discrepancies, let's discuss options one by one: 1. Add to fixed expenses: - Adding to fixed expenses will further decrease savings, which is not a desirable option. 2. Decrease food expenses: - Actual food expenses were $[/tex]125.00, exceeding the budget by [tex]$50.00. If we can reduce food expenses back to the budgeted $[/tex]75.00, we would save an additional [tex]$50.00 compared to the current spending. 3. Reduce rent payments: - Rent payments are already at a fixed $[/tex]200.00, both in the budget and actual amounts. Adjusting rent might not be feasible or practical and generally requires significant lifestyle changes which may not be simple or immediate.
4. Increase total income:
- Although increasing income is an option, it might not be the simplest or most direct method to increase savings immediately as it may involve finding additional sources of income or negotiating a raise.
### Conclusion
To produce more savings next month with the simplest change, the best approach is to decrease food expenses to the budgeted amount. This is practical and directly affects the savings:
- Savings Improvement: [tex]$50.00 - New Savings: Applying this adjustment, the total new savings can be calculated as: \[ \text{Current savings (Actual)} + \text{Savings Improvement} = -\$[/tex]20.00 + \[tex]$50.00 = \$[/tex]30.00 \]
Therefore, the simplest change that can be made to the budget to produce more savings next month is to decrease food expenses.
