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)		100
Revenue ($365.00q)	$	36,500
Expenses:
Wages and salaries ($8,000 + $125.00q)		20,500
Supplies ($3.00q)		300
Equipment rental ($1,800 + $32.00q)		5,000
Insurance ($3,400)		3,400
Miscellaneous ($630 + $1.80q)		810
Total expense		30,010
Net operating income	$	6,490

  

Required:

During May, the company’s activity was actually 105 diving-hours. Complete the following flexible budget for that level of activity.

Answer 1

Solution:

Puget Sound Drivers
Flexible Budget
For the month ended May 31
Actual Diving Hours	105
Revenue	$38,325
Expenses:
Wages and Salaries	$21,125
Supplies	$315
Equipment Rental	$5,160
Insurance	$3,400
Miscellaneous	$819
Total Expenses	$30,819
Net Operating Income	$7,506