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 ($400.00q)	$	120,000
Expenses:
Wages and salaries ($11,700 + $124.00q)		48,900
Supplies ($6.00q)		1,800
Equipment rental ($2,100 + $22.00q)		8,700
Insurance ($4,100)		4,100
Miscellaneous ($540 + $1.46q)		978
Total expense		64,478
Net operating income	$	55,522

During May, the company’s actual activity was 290 diving-hours.

Required:

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

.

Jake’s Roof Repair has provided the following data concerning its costs:

	Fixed Cost per Month			Cost per Repair-Hour
Wages and salaries	$	21,200		$	15.00
Parts and supplies				$	7.40
Equipment depreciation	$	2,730		$	0.45
Truck operating expenses	$	5,710		$	1.50
Rent	$	4,660
Administrative expenses	$	3,890		$	0.60

For example, wages and salaries should be $21,200 plus $15.00 per repair-hour. The company expected to work 2,600 repair-hours in May, but actually worked 2,500 repair-hours. The company expects its sales to be $46.00 per repair-hour.

Required:

Compute the company’s activity variances for May. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Answer 1