Business Math Chapter 8 Notes

Concepts 8 -1 and 8 – 2

Average monthly expenses: track expenses and group by category. For each category or for each month, find the sum of the monthly expenses and divide by the number of months.

Average Monthly Expense = Total Expenses Number of Months

Budgets - are your future spending plans. A budget should reflect your average monthly spending analysis as well as incorporate any changes that you would want to make in spending based on your evaluation of your spending habits.

Ex 1 Tracer Family Scenario:

a. What percentage of their income does the Tracer family spend on monthly housing expenses?

$650 * $2,600 = .25 = 25%

Note: Financial advisors – pay yourself first. Start saving early.

Key concept: Envelope method

Section 8 - 3: Best Buys

Definitions

Unit Price – the price of one item or one measure of the item.

Ex 1

18 oz. for $3.29

24 .oz for $3.99

a. U

nit price of 18 oz.

3.29 = .1827 18

b. unit price for 24 oz.

3.99 = .1662 24

c. Which is better by and by how much?

24 oz. by $.017 per oz.

Ex 2

After Christmas boxes of card are two for $32. Before Christmas one box was $23.99.

a. If bought six boxes after Christmas how much would you save?

6 boxes before = $23.99 * 6 = $143.94

6 boxes after = $32 * 3 = $96

Saved $47.94

Ex 3

Rent paint sprayer. The job should take an anticipated five hours. Hourly rate = $18 per hour. Full day = $80 per day.

a. Which is cheaper?

Hourly 18 * 5 = $90

Full day = $80

Full day is cheaper

Ex 4

A ladder rents for $23.99. Costs $349.99 new. Will be used four days each year.

a. Cost per year to rent.

23.99 * 4 = $95.96

b. How many years would it take for the rental charges to equal/exceed the cost of buying?

349.99/95.96 = 3.64 years

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Section 8 - 5: Adjusting a Budget

Definitions

Over-budget – when you are spending more in a category or in a total than was budgeted.

Under-budget – when you are spending less in a category or in total than was budgeted.

Ex 1

Tracer Family Budget Expanded

On a separate sheet of paper:

1. Identify over and under budget areas.

2. Calculate new percentage/adjusted budget.

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