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

Puget Sound Divers

Flexible budget

For the month ended May 31

Particular	Amount
Revenue ( $ 365 * 105)	$ 38,325
Expenses:
Wages and Salaries ( $ 8000 + $ 125 * 105)	$ 21,125
Supplies ($ 3 * 105)	$ 315
Equipment Rental ( $ 1,800 + $ 32 * 105)	$ 5,160
Insurance	$ 3,400
Miscellaneous ( $ 630 + $ 1.80 * 105)	$ 819
Total Expense	$ 30,819
Net Operating Income	$ 7,506