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 During May, the company’s actual activity was 105 diving-hours. Required: Prepare a flexible budget for May.

Answer 1

Flexible Budget
Driving Hours	105
Revenue	38,325	=105*365
Expenses
Wages & Salaries	21,125	=8000+125*105
Supplies	315	=3*105
Equipment Rental	5,160	=1800+32*105
Insurance	3,400
Miscellaneous	819	=630+1.8*105
Total Expenses	30,819
Net operating Income	7,506