EXERCISE9-1 Prepare a Flexible Budget Puget Sound Divers is a company that provi

Question

EXERCISE9-1 Prepare a Flexible Budget

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 .6490

Required:
During May, the company's activity was actually 105 diving-hours. Prepare a flexible budget for that level of activity. EXERCISE9-1 Prepare a Flexible Budget

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 .6490

Required:
During May, the company's activity was actually 105 diving-hours. Prepare a flexible budget for that level of activity.

Explanation / Answer

Revised Planning Budget For the Month Ended May 31 Budgeted diving-hours (q) . 105 Revenue ($365.00q) , . 38,325 Expenses: Wages and salaries ($8,000 + $125.00q) . 21,125 Supplies ($3.00q) . 315 Equipment rental ($1,800 + $32.00q) . 5,160 Insurance ($3,400) . 3,400 Miscellaneous ($630 + $1.80q) . 819 Total expense .30,819 Net operating income .7506

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