Question

This chart shows Dan’s budget:

Answer 1

The correct answer is D. No, Dan should reduce his discretionary spending.

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Answer 2

The correct answer is D No, Dan should reduce his discretionary spending

Explanation:

For Dan to stay on the budget he needs to spend the amount budgeted for each expense or less than the amount budgeted. This occurred in the case of the Internet, food, and rent; for example, the amount budgeted for the internet was $35 and Dan spent this money, also, the amount budgeted for food was $100 and Dan spent $95, which means he stood in the budget. However, this did not occur with discretionary spending, which refers to other non-necessary expenses, because in this case, Dan spent $140 even when the budget limit was $100. Also, this exceeds the total income considering 35 + 95 + 500+ 140 = $770, which is above the income ($750). Thus, Dan did not stay in the budget because he spent more money than expected in discretionary spending and should reduce this.