To determine how the budget can be modified so that there will be a positive actual net income, let's go through the numbers step-by-step.
### Original Monthly Budget
- Income:
- Budgeted: [tex]$1250
- Actual: $[/tex]1050 (reduced by [tex]$200)
- Expenses:
- Rent: $[/tex]450
- Utilities: [tex]$220
- Food: $[/tex]200
- Clothes: [tex]$75
- Cell Phone: $[/tex]155
### Step 1: Calculate the Total Original Expenses
Sum up all the original budgeted expenses:
[tex]\[ \$450 + \$220 + \$200 + \$75 + \$155 = \$1100 \][/tex]
### Step 2: Calculate the Actual Net Income
Subtract the total original expenses from the actual income to find the actual net income:
[tex]\[ \text{Actual Income} - \text{Total Original Expenses} = \$1050 - \$1100 = -\$50 \][/tex]
This results in a negative net income of [tex]$-50$[/tex], meaning expenses exceed income.
### Step 3: Modify the Budget to Achieve Positive Net Income
To convert this negative net income into a positive one, we need to reduce the expenses. Here is one proposed modification strategy:
#### Strategy: Reduce Rent and Utilities
- Rent: Reduced by [tex]$50
- Original: $[/tex]450
- Modified: [tex]$400
- Utilities: Reduced by $[/tex]20
- Original: [tex]$220
- Modified: $[/tex]200
Modified expenses are now:
- Rent: [tex]$400
- Utilities: $[/tex]200
- Food: [tex]$200 (unchanged)
- Clothes: $[/tex]75 (unchanged)
- Cell Phone: [tex]$155 (unchanged)
### Step 4: Calculate the Modified Total Expenses
Sum up the modified expenses:
\[ \$[/tex]400 + \[tex]$200 + \$[/tex]200 + \[tex]$75 + \$[/tex]155 = \[tex]$1030 \]
### Step 5: Calculate the Modified Net Income
Subtract the modified total expenses from the actual income:
\[ \text{Actual Income} - \text{Total Modified Expenses} = \$[/tex]1050 - \[tex]$1030 = \$[/tex]20 \]
This results in a positive net income of [tex]$20.
### Conclusion
To convert the original budget deficit to a surplus, the best modification strategy is:
- Reduce the amount spent on rent from $[/tex]450 to [tex]$400.
- Reduce the amount spent on utilities from $[/tex]220 to [tex]$200.
This will adjust the total monthly expenses to $[/tex]1030, resulting in a positive net income of $20.
