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 DiversPlanning BudgetFor the Month Ended May 31Budgeted diving-hours (q) 100Revenue ($365.00q) $ 36,500Expenses:Wages and salaries ($8,000 $125.00q) 20,500Supplies ($3.00q) 300Equipment rental ($1,800 $32.00q) 5,000Insurance ($3,400) 3,400Miscellaneous ($630 $1.80q) 810Total expense 30,010Net operating income $ 6,490During May, the company’s actual activity was 105 diving-hours.Required:Prepare a flexible budget for May.Question 1 of 5 Total 1 of 5McGraw Hill Education

Answer 1

Answer:

See below.

Explanation:

We summarize the information first.

Budgeted Information

Driving hours = 100

Revenue = 365/hour

Wages and salaries = (8000 + 125/h)

Supplies = 3/h

Equipment rental = 1800 + 32/h

Insurance = 3400

Miscellaneous = 630 + 1.8/h

We flex this information for 105 hours as

Sales (365*105)                                             $38,325

Less: Expenses

Wages and Salaries(8000 +125*105)           $21,125

Supplies (3*105)                                             $315

Rental Equip (1800 + 32*105)                        $5,160

Insurance                                                        $3,400

Miscellaneous (630 + 1.8*105)                       $819

Net operating Income                                    $7,506

Hope that helps.