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Exercise 9-1 Prepare a Flexible Budget [LO9-1] Puget Sound Divers is a company that provides diving...

Exercise 9-1 Prepare a Flexible Budget [LO9-1]

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) 250
Revenue ($390.00q) $ 97,500
Expenses:
Wages and salaries ($11,000 + $126.00q) 42,500
Supplies ($5.00q) 1,250
Equipment rental ($2,100 + $26.00q) 8,600
Insurance ($3,800) 3,800
Miscellaneous ($540 + $1.48q) 910
Total expense 57,060
Net operating income $ 40,440

During May, the company’s actual activity was 240 diving-hours.

Required:

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

Solutions

Expert Solution

Puget Sound Drivers
Flexible Budget Report
For the month ended May 31
Flexible Budget
Actual Driving hours (q) 240
Revenue ($390 X q) $        93,600
Expenses:
Wages and salaries $11000 + ($126 * q) $        41,240
Supplies ($5 * q) $          1,200
Equipment rental $2100 + ($26 * q) $          8,340
Insurance $                             3,800 $          3,800
Miscellaneous $540 + ($1.48 * q) $ 895
Total expense $        55,475
Net operating income $        38,125

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