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 ($390.00q)	$	117,000
Expenses:
Wages and salaries ($11,000 + $122.00q)		47,600
Supplies ($6.00q)		1,800
Equipment rental ($2,500 + $23.00q)		9,400
Insurance ($4,100)		4,100
Miscellaneous ($510 + $1.50q)		960
Total expense		63,860
Net operating income	$	53,140

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 dollar.)

Answer 1

Flexible Budget

For the Month Ended May 31

Actual diving-hours (q)	290
Revenue (390 x 290)	113,100
Expenses :
Wages and salaries ($11,000 + $122.00 x 290)	46,380
Supplies ($6.00 x 290)	1,740
Equipment rental ($2,500 + $23.00 x 290)	9,170
Insurance ($4,100)	4,100
Miscellaneous ($510 + $1.50 x 290)	945
Total expenses	-62,335
Net operating income	$50,765