Emily had an excellent year as a saleswoman in 2007. She earned $97,000. She paid $17,000 for "necessities" such as mortgage, food, and clothing. She was given a
Six-week all expenses paid vacation by the company for her sales performance that had a value of $9,000. Her provincial and federal income taxes totaled $24,000. What was her discretionary income?

Question

Quizplus · Accepted Answer

Discretionary income is calculated by subtracting taxes and necessities from total income. Emily's discretionary income is $97,000 (total income) - $17,000 (necessities) - $24,000 (taxes) = $56,000. The value of the vacation does not subtract from her income since it's a benefit provided by the company and not an expense she incurred.

Emily Had an Excellent Year as a Saleswoman in 2007