This prompt is about Budgeting. Based on the rates provided, David's tax payable is $11, 522.5. See the calculation below.
What is the calculation justifying the above tax rate?
The calculation is given as:
Total Annual Salary x Tax Rate
= 52, 375 X 22%
Tax Payable = $11, 522.50
What is the Net Annual Income?
The Net Annual Income = Gross Annual Income less Annual Tax.
⇒ 52, 375 - 11, 522.50
Net Annual Income = $40,852.5
Is David underspending in any category? if so which one(s)?
From the computation which was done using the Net monthly income
It is to be noted that David is Under spending on:
- Groceries
- Transportation
- Debt
- Church; and
- Savings.
Note that Net Monthly income is derived by dividing Net Annual Income by 12. That is:
40852.5/12
= 3,404.375
[tex]\approx[/tex] 3,404.38
Is David overspending in any category? if so which one(s)?
From the spending schedule, it is also clear that David is over spending on:
How can David Adjust his Budget to make the new payment of $275?
All David needs to do is to reduce the excess amount being spent on:
This will bring the total excess available to $288.94 from which he can service the Car Budget.
What is the computation justifying the above?
Step 1: - Derive the Budget Surplus
Actual Amount Spent = 3175
Projected Amount = 3, 404.38 (which is also equal to Net Monthly Income)
Budget Surplus = $229.38
3,404.38 - 3,175 = 229.38
Step 2 - Adjust
Recall that David over spent on:
Adjust the above to the projected. We have a total surplus of $288.94
229 + 28.69 + 59.56
= $288.94
$288.94 Less $275
Balance $ 13.94
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