The Brogan Family Currently Lives in a Suburb of a Major

question 125

Essay

The Brogan family currently lives in a suburb of a major city. They have a lovely home close to major routes of transportation. Both Mr. and Mrs. Brogan have convenient commutes of 30 minutes or less. Because the school system in their town does not have a quality reputation, they currently send their daughter to private school, conveniently located less than one mile from their home. The family's current monthly living expenses are listed below:
$$\begin{array} { l r } & \text { Monthly } \\& \text { Budget } \\\text { Mortgage, including taxes and insurance } & \$ 5,000\\\text { Other utilities, including water, heat and telephone } &500 \\\text { Costs of runirg automobiles } &800 \\\text { Cost of private school } & 2,000 \\\text { Total monthly budget } &\$8,300\\\end{array}$$
The Brogans are considering moving to a town approximately 20 minutes away. Because of the desirability of the local schools and strict zoning, housing is very expensive in this town. Their daughter would attend public schools. The Brogans estimate that their monthly mortgage, taxes and insurance would increase to $7,000 per month, while the cost of running automobiles would increase 20% and other utilities 10%. Mortgage interest costs are tax deductible and the Brogans are in the 25% tax bracket. Assume that $700 of the increase in their monthly budget is for mortgage interest. What are the costs and benefits of moving? Which can be quantified and which cannot?

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Definitions:

Adjusting Entries

Journal entries made before the preparation of financial statements to ensure that revenues and expenses are recognized in the period they occur.

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Legal action taken against a manufacturer or seller for producing or selling a defective product that causes injury or harm to the consumer.

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A benefit provided by employers that pays employees while they are on holiday.