Question

Lewis has a net spendable income of $2,000 per month. He sets up the following transportation budget for himself.

3. Transportation (15% - 20%) 400
a. Car payments 210
b. Gas/Oil 120
c. Insurance 60
d. License/Registration 8
e. Taxes 2
f. Maintenance/Repair
What has Lewis done wrong?
A.
He budgeted more than the maximum recommended amount of money for transportation.
B.
He budgeted less than the minimum recommended amount of money to cover gas for the month.
C.
He has more money in the subcategories than he budgeted for in the main category.
D.
He has not budgeted for all of the expenses in the subcategories.

Answer 1

D

Explanation:

Answer 2

Lewis has a net spendable income of $2,000 per month.

He sets up 15 to 20 percent for transportation budget. This means he sets up between:

`0.15*2000=300` and
`0.20*2000=400` dollars.

Now, Lewis has allotted
`210+120+60+8+2=400` to five subcategories. He has no money left for maintenance or repairs.

So, there are 2 possible answers.

A. He budgeted more than the maximum recommended amount of money for transportation. - If he adds some money to repairs it will be more than $400 thus making the budget more than $400.

And another possible answer is option D. He has not budgeted for all of the expenses in the subcategories. - He has not allotted cost for repairs.