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:
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Puget Sound Divers Planning Budget For the Month Ended May 31 |
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| Budgeted diving-hours (q) | 300 | |
| Revenue ($420.00q) | $ | 126,000 |
| Expenses: | ||
| Wages and salaries ($11,800 + $124.00q) | 49,000 | |
| Supplies ($5.00q) | 1,500 | |
| Equipment rental ($2,300 + $23.00q) | 9,200 | |
| Insurance ($3,900) | 3,900 | |
| Miscellaneous ($500 + $1.42q) | 926 | |
| Total expense | 64,526 | |
| Net operating income | $ | 61,474 |
During May, the company’s actual activity was 290 diving-hours.
Answer:-
| Puget Sound drivers | ||
| Flexible Budget | ||
| For the month of Ended May 31 | ||
| Particulars | Amount | |
| $ | ||
| Revenue (a) | 290 diving hours*$420 per hour | 121800 |
| Variable expenses:- | ||
| Wages & Salaries | 290 diving hours*$124 per hour | 35960 |
| Supplies | 290 diving hours*$5 per hour | 1450 |
| Equipment rental | 290 diving hours*$23 per hour | 6670 |
| Miscellenous | 290 diving hours*$1.42 per hour | 412 |
| Total variable costs (b) | 44492 | |
| Fixed Expenses | ||
| Wages & Salaries | 11800 | |
| Equipment rental | 2300 | |
| Insurance | 3900 | |
| Miscellenous | 500 | |
| Total fixed costs (c) | 18500 | |
| Net Opreating income d=a-(b+c) | 58808 | |
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