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)		300
Revenue ($480.00q)	$	144,000
Expenses:
Wages and salaries ($11,100 + $124.00q)		48,300
Supplies ($5.00q)		1,500
Equipment rental ($2,100 + $26.00q)		9,900
Insurance ($4,100)		4,100
Miscellaneous ($520 + $1.46q)		958
Total expense		64,758
Net operating income	$	79,242

  

Required:

During May, the company’s activity was actually 290 diving-hours. Complete the following flexible budget for that level of activity.

Answer 1

Puget Sound Divers
Flexible Budget
For the Month Ended May 31
Actual diving-hours (q)	290
Revenue ($480.00q)	139,200
Expenses:
Wages and salaries ($11,100 + ($124.00 x 290))	47,060
Supplies ($5.00 x 290)	1,450
Equipment rental ($2,100 + ($26.00 x 290))	9,640
Insurance ($4,100)	4,100
Miscellaneous ($520 + ($1.46 x 290))	943
Total expense	63,193
Net operating income	76,007