Question

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Exercise 9-1 Prepare a Flexible Budget (LO9-1] 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 (9) 109 $36,500 Revenue ($365.009) Expenses: Wages and salaries ($8,000 + $125.009) Supplies ($3.009) Equipment rental ($1,800 + $32.009) Insurance ($3,400) Miscellaneous ($630 + $1.809) Total expense Net operating income 20,500 300 5,000 3,400 810 30,010 $ 6,490 During May, the company's actual activity was 105 diving-hours.

Answer 1

Flexible Budget for the Month of May

	Budgeted	Actual Hours
Diving Hours	100 hours	105 hours
Revenue	$           36,500.00	$          38,325.00
Wages & Salaries
Fixed	$             8,000.00	$            8,000.00
Variable	$           12,500.00	$          13,125.00
Supplies	$                 300.00	$                315.00
Equipment Rental
Fixed	$             1,800.00	$            1,800.00
Variable	$             3,200.00	$            3,360.00
Insurance	$             3,400.00	$            3,400.00
miscellaenous
Fixed	$                 630.00	$                630.00
Variable	$                 180.00	$                189.00
Total Expenses	$           30,010.00	$          30,819.00
Net Operating Income	$             6,490.00	$            7,506.00