Question

The following table contains the Jones family's net monthly income and expenses. $$\begin{aligned} &2\\\ &\begin{array}{l|l} \text { Income } & \text { Expenses } \\ \hline \text { Mr. Jones: } \$ 2252.70 & \text { Mortgage: } \$ 1680 \\ \hline \text { Mrs. Jones: } \$ 2597.30 & \text { Car Loan } 1: \$ 380 \\ \hline & \text { Car Loan } 2: \$ 465 \\ \hline & \text { Credit Card Payments: } \$ 220 \\ \hline & \text { Utilities: } \$ 485 \\ \hline & \text { Groceries: } \$ 450 \\ \hline \end{array} \end{aligned}$$ a. Complete the following table with the percent of the total monthly income that each expense represents. (Round each percent to one decimal place.) $$\begin{array}{l|c|c|c|c|c|c} & \text { Mortgage } & \text { Car loan 1 } & \text { Car loan 2 } & \begin{array}{c} \text { Credit card } \\ \text { payments } \end{array} & \text { Utilities } & \text { Groceries } \\ \hline \begin{array}{l} \text { Percent of total } \\ \text { monthly income } \end{array} & & & & & & \end{array}$$ b. What is the total percent of the family's income paid toward expenses? c. What percent of the family's income is left after all expenses are paid? d. Draw a circle graph showing the percent of the total monthly income that each expense represents, along with the percent remaining after all expenses are paid. (Circle can't copy)

Short answer

Answer: 24.2%

Step-by-step solution

Calculate total monthly income

To find the percentage each expense represents, first calculate the total monthly income by adding Mr. Jones' and Mrs. Jones' incomes: $$Total\:Income = Mr.Jones\:income + Mrs.Jones\:income$$ $$Total\:Income = \$2252.70 + \$2597.30$$ $$Total\:Income = \$4850$$

Calculate the percent of each expense

Next, find the percentage each expense represents based on the total monthly income. For each expense, divide the expense amount by the total monthly income and multiply by 100: %Mortgage% $$\frac{1680}{4850}\times 100 \approx34.6\%$$ %Car Loan 1% $$\frac{380}{4850}\times 100 \approx7.8\%$$ %Car Loan 2% $$\frac{465}{4850}\times 100 \approx9.6\%$$ %Credit Card Payments% $$\frac{220}{4850}\times 100 \approx4.5\%$$ %Utilities% $$\frac{485}{4850}\times 100 \approx10.0\%$$ %Groceries% $$\frac{450}{4850}\times 100 \approx9.3\%$$

Complete table with percentages

Complete the table with the percentages found: $$\begin{array}{l|c|c|c|c|c|c} & \text { Mortgage } & \text { Car loan 1 } & \text { Car loan 2 } & \begin{array}{c} \text { Credit card } \\\ \text { payments } \end{array} & \text { Utilities } & \text { Groceries } \\\ \hline \begin{array}{l} \text { Percent of total } \\\ \text { monthly income } \end{array} & 34.6\% & 7.8\% & 9.6\% & 4.5\% & 10.0\% & 9.3\% \end{array}$$

Calculate total percent of income paid toward expenses

To find the total percent of the family's income paid toward expenses, add up the percentages of each expense: $$Total\:percent\:of\:expenses = 34.6\% + 7.8\% + 9.6\% + 4.5\% + 10.0\% + 9.3\%$$ $$Total\:percent\:of\:expenses = 75.8\%$$

Calculate the percent of income left after expenses are paid

To find the percent of the family's income left after all expenses are paid, subtract the total percent of expenses from 100: $$Percent\:left\:after\:expenses = 100\% - 75.8\%$$ $$Percent\:left\:after\:expenses = 24.2\%$$

Draw the circle graph

To draw the circle graph, represent each expense's percentage and the percentage left after expenses as a section of a circle, proportional to the calculated percentages. Label each section with the corresponding expense or remaining income portion, and its respective percentage. Make sure the circle is divided correctly, with all sections adding up to 100%. Since the answer format cannot copy a circle graph, use graph paper or a computer program to create this representation.

Key concepts

Percentage Calculations

Understanding percentage calculations is crucial, especially in budgeting. A percentage tells us how much of a whole something represents. For example, to find what percentage an expense is of the total income, you perform this calculation:

• Divide the expense amount by the total income.
• Multiply the result by 100 to convert it to a percentage.

For instance, to find what percentage the mortgage is of the Jones family's total income, you divide $1680 by $4850, then multiply by 100, resulting in approximately 34.6%. This process helps in understanding the impact of each expense on overall finances. Through these calculations, you gain insights into where money is allocated.

Income and Expenses

Managing income and expenses effectively is a key aspect of personal finance. In the example of the Jones family, income sources include Mr. and Mrs. Jones's earnings, totaling $4850. Their expenses include mortgage, car loans, credit card payments, utilities, and groceries.
These expenses are constants that must be managed within the income. By calculating expenses as percentages of income, you gain a clearer picture of budgeting, allowing comparisons between different needs and wants.

• If expenses add up to 75.8% of income, as in the Jones's case, it shows how much is consumed by regular costs.
• This leaves 24.2% of income remaining, opening up possibilities for savings or additional discretionary spending.

Understanding these dynamics helps prioritize spending and saving strategies.

Circle Graphs

Circle graphs, also known as pie charts, offer a visual representation of how income is distributed across different expenses. Each section of the circle corresponds to a category of expense or remaining income, sized according to its percentage of the total.
To create a circle graph:

• Draw a circle and divide it into sections based on the calculated percentages.
• Each section should visually represent expenses like mortgage (34.6%), and others like car loans and utilities.
• Dedicate a section to the remaining income percentage (24.2%).

This visual aid simplifies understanding of how each expense relates to the whole budget, making it easier to spot areas that might require adjustments. Circle graphs make financial data less abstract and more digestible at a glance.