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 ($430.00q) $129,000 Expenses: Wages and salaries ($11,300 + $128.00q) 49,700 Supplies ($4.00q) 1,200 Equipment rental ($2,400 + $25.00q) 9,900 Insurance ($3,900) 3,900 Miscellaneous ($510 + $1.44q) 942 Total expense 65,642 Net operating income $63,358 During May, the company’s actual activity was 290 diving-hours. Complete the following flexible budget for that level of activity.Revenue Expenses: Wages and salaries Supplies Equipment rental Insurance Miscellaneous Total expense Net operating income

Answer 1

Answer:

Revenue $124,700

Expenses:

Wages and salaries 48,420

Supplies 1,160

Equipment rental 9,650

Insurance 3,900

Miscellaneous 928

Total expense$64,058

Net Operating income $60,642

Explanation:

Calculation to Complete the flexible budget for that level of activity

FLEXIBLE BUDGET

Actual diving hours 290

Revenue (290*$430) $124,700

Expenses:

Wages and salaries (11,300+290*128) 48,420

Supplies (290*4) 1,160

Equipment rental (2,400+290*25) 9,650

Insurance 3,900

Miscellaneous (510+290*1.44) 928

Total expense $64,058

Net Operating income $60,642

($124,700-$64,058)