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) 250 Revenue ($460.00q) $115,000 Expenses: Wages and salaries ($11,800 $120.00g) Supplies ($5.00q) Equipment rental ($2,100 $21.00g) Insurance ($3,900) Miscellaneous ($540 + $1.46q) Total expense 41,800 1,250 7,350 3,900 905 55,205 59,795 Net operating income During May, the company's actual activity was 240 diving-hours.

Answer 1

Solution

Puget Sound Divers
Flexible Budget
For the Month Ended May 31
Actual diving hours	240
Revenue	$    110,400
Expenses:
Wages and salaries	$      40,600
Supplies	$        1,200
Equipment rental	$        7,140
Insurance	$        3,900
Miscellaneous	$          890
Total expense	$      53,730
Net operating income	$      56,670

Working

		A= Variable portion	B= Fixed portion	C= Units	D=(C x A)+B
Revenue		460		240	$    110,400
Expenses:				240
Wages and salaries		120	11800	240	$      40,600
Supplies		5	0	240	$        1,200
Equipment rental		21	2100	240	$        7,140
Insurance		0	3900	240	$        3,900
Miscellaneous		1.46	540	240	$          890
Total expense				240	$      53,730
Net operating income				240	$      56,670