Question

15. What activity All applicable exercises are available with McGraw-Hill's Connect Accounting. Puget Sound Divers is a company that provides diving services such as underwater ship repairs to connect ACCOUNTING EXERCISE 9-1 Prepare a Flexible Budget [LO9-1] 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 31 100 Budgeted diving-hours (q) Revenue ($365.00q) $36,500 Expenses: Wages and salaries ($8,000 + $125.00q) Supplies($3.00q) Equipment rental ($1,800+ $32.00q) Insurance ($3,400) Miscellaneous ($630 $1.80q) 20,500 300 5,000 3,400 810 Total expense 30,010 $6,490 Net operating income Required: During May, the company's activity was actually 105 diving-hours. Prepare a flexible budget for that level of activity.

Answer 1

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Puget Sound Divers
Separation of Variable cost per unit and Total Fixed cost
Particulars	Variable cost Per unit	Fixed Cost
Sell Price	365.00
Expenses
Wages & Salaries	125.00	8,000.00
Supplies	3.00
Equipment Rental	32.00	1,800.00
Insurance		3,400.00
Miscellaneous	1.80	630.00
Total costs	161.80	13,830.00
Flexible Budget Report
Particulars	Per Hour rate/cost	Amount $	Note
Diving Hours		105.00	A
Sales	365.00	38,325.00	This is Sell price per hour * A
Variable costs
Wages & Salaries	125.00	13,125.00	This is Wages & Salaries per hour * A
Supplies	3.00	315.00	This is Supplies per hour * A
Equipment Rental	32.00	3,360.00	This is Equipment Rental per hour * A
Miscellaneous	1.80	189.00	This is Miscellaneous costs per hour * A
Total Variable costs	161.80	16,989.00
Contribution margin	203.20	21,336.00
Fixed Costs
Wages & Salaries		8,000.00
Equipment Rental		1,800.00
Insurance		3,400.00
Miscellaneous		630.00
Total Fixed Costs		13,830.00
Operating Income		7,506.00