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

Answer-

Puget Sound drivers
Flexible Budget
For the month of Ended May 31
Particulars		Amount
		$
Revenue (a)	105 diving hours*$365 per hour	38325
Expenses:-
Wages & Salaries	(105 diving hours*$125 per hour)+$8000	21125
Supplies	105 diving hours*$3 per hour	315
Equipment rental	(105 diving hours*$32 per hour)+1800	5160
Insurance		3400
Miscellaneous	(105 diving hours*$1.80 per hour)+630	819
Total expenses (b)		30819
Net Operating income (c=a-b)		7506