Adjusting a budget - Given the net income, the percent budgeted for two variable expenses, and the amount of an unexpected bill, determine if there is enough money in the variable expense items to cover the amount of the unexpected expense or if the bill should be covered with savings. Net income: $900; Percent item 1: 5%; Percent item 2: 7%; Bill due: $198.50; Amount in savings: $267.
To determine if there is enough money in the variable expense items to cover the unexpected expense or if the bill should be covered with savings, we need to calculate the amounts budgeted for each variable expense item and compare them to the amount of the unexpected bill.
First, let's calculate the amounts budgeted for the variable expense items:
- Item 1: 5% of the net income of $900
Amount budgeted for item 1 = 5/100 * $900 = $45
- Item 2: 7% of the net income of $900
Amount budgeted for item 2 = 7/100 * $900 = $63
Next, we compare the sum of the amounts budgeted for the variable expense items ($45 + $63 = $108) with the amount of the unexpected bill ($198.50).
Since $108 is less than $198.50, the variable expense items do not have enough money to cover the unexpected bill. Therefore, we need to cover the bill with savings.
Finally, we check if the amount in savings ($267) is sufficient to cover the bill ($198.50). Since $267 is greater than $198.50, there is enough money in savings to cover the bill.
In summary, with a net income of $900, budgeting 5% for item 1 and 7% for item 2, and an unexpected bill of $198.50, the bill should be covered with savings because the variable expense items do not have enough money to cover it.