Question

Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The company’s planning budget for May appears below:

Puget Sound Divers Planning Budget For the Month Ended May 31
Budgeted diving-hours (q)		350
Revenue ($430.00q)	$	150,500
Expenses:
Wages and salaries ($11,900 + $124.00q)		55,300
Supplies ($6.00q)		2,100
Equipment rental ($2,400 + $22.00q)		10,100
Insurance ($4,100)		4,100
Miscellaneous ($520 + $1.50q)		1,045
Total expense		72,645
Net operating income	$	77,855

During May, the company’s actual activity was 340 diving-hours.

Required:

Prepare a flexible budget for May. (Round your answers to the nearest whole number.)

Answer 1

Puget Sound Divers
Flexible Budget
For the Month Ended May 31
Actual driving hours	340
Revenue                                             [Actual diving hours x Revenue per diving hour = 340 hours x $430]	$146,200
Expenses:
Wages and salaries                    [$11,900 + (340 hours x $124)]	$54,060
Supplies                                     [340 hours x $6]	$2,040
Equipment rental                        [$2,400 + (340 hours x $22)]	$9,880
Insurance	$4,100
Miscellaneous                              [($340 hours x 1.50) + $520]	$1,030
Total expense                                    [$54,060 + $2,040 + $9,880 + $4,100 + $1,030]	$71,110
Net operating income                        [Revenue - Total expenses = $146,200 - $71,110]	$75,090