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)		250
Revenue ($430.00q)	$	107,500
Expenses:
Wages and salaries ($11,900 + $120.00q)		41,900
Supplies ($5.00q)		1,250
Equipment rental ($2,000 + $22.00q)		7,500
Insurance ($3,800)		3,800
Miscellaneous ($510 + $1.46q)		875
Total expense		55,325
Net operating income	$	52,175

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 dollar.)

Answer 1

PUGET SOUND DRIVERS
Flexible Budget
For the month ended May 31
Revenue [240 x $430]	103,200
Expenses
Wages and salaries [$11,900 + (240 x 120)]	40,700
Supplies [240 x $5]	1,200
Equipment rental [$2,000 + (240 x $22)]	7,280
Insurance [$3,800]	3,800
Miscellaneous [$510 + (240 x $1.46)]	860
Total expense	53,840
Net operating income	49,360