Creating a Hypothetical Budget - Portfolio Activity
Expense: Rent (monthly) Amount: $657.00
Expense: Telephone (monthly) Amount: $56.34
Expense: Groceries (weekly) Amount: $56.00
Expense: Clothing (monthly with 1/2 job related) Amount: $106.00
Expense: Water & Electric (monthly) Amount: $98.87
Expense: Dinner & Movie (weekly) Amount: $40.00
You are paid $11.75/hour. You work 40 hr/wk. Your deductions are FICA (7.65%), Federal tax withholding (10.75%), and state tax withholding (7.5%).
1). Assuming you budget a month as 4 weeks, how much is your total realized income, fixed expenses, and discretionary expenses?
2). If you are able to work 20 hours of overtime the next month and are paid 1.5 times your regular rate, how does this change your budget for that month?
3). How much can you put towards savings each month if you eliminate your discretionary expenses?
Be sure to include in your response:
- a detailed budget showing income and expenses for the two different months.
- answers to the original questions.
- an explanation for how you calculated the first 40 hours of income and then the additional 20 hours of overtime.
Thank you SO MUCH in Advance if you answer this for me!
To answer these questions, we will calculate your total realized income, fixed expenses, discretionary expenses, and savings for both months.
1) Calculating total realized income, fixed expenses, and discretionary expenses:
Income:
Your regular hourly rate is $11.75, and you work 40 hours per week. So your income per week would be:
Regular income per week: $11.75 * 40 = $470.00
For both months, considering a month as 4 weeks, your total realized income would be:
Total realized income for the month: $470.00 * 4 = $1,880.00
Fixed Expenses:
Rent: $657.00 per month
Telephone: $56.34 per month
Clothing: $106.00 per month (with 1/2 job related)
Water & Electric: $98.87 per month
Total fixed expenses for the month: $657.00 + $56.34 + $106.00 + $98.87 = $918.21
Discretionary Expenses:
Groceries: $56.00 per week
Dinner & Movie: $40.00 per week
Total discretionary expenses for the month: $56.00 * 4 + $40.00 * 4 = $384.00
2) Calculating the changes to your budget for the month with 20 hours of overtime:
Overtime Rate: 1.5 times your regular rate
Overtime income per week: 1.5 * $11.75 * 20 = $352.50
Your total income for the month with overtime would be:
Total overtime income for the month: $352.50 * 4 = $1,410.00
Fixed expenses remain the same:
Total fixed expenses for the month: $918.21
Discretionary expenses remain the same:
Total discretionary expenses for the month: $384.00
3) Calculating the savings each month if discretionary expenses are eliminated:
If you eliminate your discretionary expenses, your savings would be the remaining income after deducting fixed expenses.
Savings for the first month:
Savings = Total realized income - Fixed expenses = $1,880.00 - $918.21 = $961.79
Savings for the second month (with overtime):
Savings = Total overtime income - Fixed expenses = $1,410.00 - $918.21 = $491.79
In summary, the detailed budget for the two different months would look like this:
Month 1:
Total realized income: $1,880.00
Fixed expenses: $918.21
Discretionary expenses: $384.00
Savings: $961.79
Month 2 (with overtime):
Total overtime income: $1,410.00
Fixed expenses: $918.21
Discretionary expenses: $384.00
Savings: $491.79
To calculate the income for the first 40 hours and the additional 20 hours of overtime, we used the regular hourly rate of $11.75 and multiplied it by the number of hours. For the overtime hours, we multiplied the regular rate by 1.5 to get the overtime rate, and then multiplied it by the number of overtime hours.