Case study

A case study will usually start with a presentation of information about a situation followed by questions either about this information or about the effects of changes to the situation.

Example

Part 1

Jim is employed as an apprentice chef. He is in his third year of his apprenticeship. His salary is \pounds850. He owns a car and stays with his parents in the family home. He travels 50 miles a day to his work (there and back). His monthly budget is shown thus:

ItemExpenditure
Car loan \pounds135
Petrol \pounds150
Parking \pounds40
Car servicing \pounds50
Car insurance \pounds40
Contribution to family expenses \pounds160
Savings \pounds60
Entertainment \pounds150
Total
Question

Calculate Jim's total expenditure and compare it to his income.

Total expenditure = \pounds785

Jim's budget plan shows that his planned expenditure is less than his monthly income. The actual amount is \pounds850 - \pounds785 = \pounds65.

(Jim keeps this money in his bank account each month and can use it if an unexpected expense occurs.)

Part 2

Jim is expecting his monthly salary to increase to \pounds930 as he enters the final year of his apprenticeship. He is also planning to leave home and flat share.

His new home will be within walking distance of his place of employment. His contribution to the monthly rent will be \pounds350. This is inclusive of gas and electricity bills as well as council tax.

Jim has to review his budget plan.

Car expenditure

Jim realises that even without considering his increase in income that he can afford the \pounds350 monthly rent if he did not own a car.

Car loan \pounds135
Petrol \pounds150
Parking \pounds40
Car servicing \pounds50
Car insurance \pounds40
Total \pounds415

His car expenditure totals \pounds415 which is \pounds65 more than the amount he needs for rent. However Jim is hoping to keep his car when he moves home. He therefore looks more closely at his 'new' monthly budget.

Further information

  • Petrol expenditure is reduced by \pounds100 as his new home is within walking distance of his place of employment.
  • Parking expenditure has been removed as his new home is within walking distance of his place of employment.
  • Contribution to family expenses has been replaced with expenditure on food of \pounds120.
Question

What effect does this further information have on his expenditure?

ItemExpenditure
Rent \pounds350
Car Loan \pounds135
Petrol \pounds50
Car servicing \pounds50
Car insurance \pounds40
Food \pounds120
Savings \pounds60
Entertainment \pounds150
Total \pounds955

Part 3

Jim's budget plan shows that his planned expenditure is more than his monthly income.

The actual amount is \pounds955 - \pounds930 = \pounds25.

However he realises that a few further changes to his budget would allow him to make this move.

Question

In your opinion, what other changes could Jim make to his budget which would allow him to keep his car and still make this move?

There is no fixed answer to this question. You should make a few reasonable suggestions to contribute to the required saving.

He could make a saving of \pounds25 by:

  • reducing his savings by \pounds10
  • reducing his food bill by \pounds5
  • reducing his entertainment spending by \pounds10
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