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) 300
Revenue ($420.00q) $126,000
Expenses:
Wages and salaries ($11,100 + $124.00q) 48,300
Supplies ($3.00q) 900
Equipment rental ($2,100 + $22.00q) 8,700
Insurance ($4,000) 4,000
Miscellaneous ($520 + $1.42q) 946
Total expense 62,846
Net operating income $63,154
Required:
During May, the company’s actual activity was 290 diving-hours. Complete the flexible budget for that level of activity.

Answer 1

$60,458

Step-by-step explanation:

Calculation to Complete the flexible budget for that level of activity

FLEXIBLE BUDGET

Flexible Budget(290 driving hours)

Revenue 121,800

(290*420)

Expenses:

Wages and salaries 47,060

($11,100 +290*$124.00q)

Supplies 870

($3.00q*290)

Equipment rental 8,480

($2,100 +290* $22.00q)

Insurance 4,000 (Fixed)

Miscellaneous 932

($520 + 290*$1.42q)

Total expense 61,342

Net operating income $60,458

(121,800-61,342)

Therefore the Flexible-budget Net operating income will be $60,458