Exercise 10-1 Prepare a Flexible Budget LO10-1 Puget Sound Divers is a company t

Question

Exercise 10-1 Prepare a Flexible Budget LO10-1 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) Revenue (S400.00q) Expenses: 200 S 80,000 Wages and salaries ($11,800 $122.00q) Supplies ($5.00q) Equipment rental ($2,200+ $21.00q) Insurance ($4,200) Miscellaneous ($530 $1.50q) 36,200 1,000 6,400 4,200 830 48,630 Total expense Net operating income 31,370 Required During May, the company's activity was actually 190 diving-hours. Complete the following flexible budget for that level of activity. (Round your final answer to nearest dollar amount.) Puget Sound Divers Flexible Budget For the Month Ended May 31 Revenue Expenses: Wages and salaries Supplies Equipment rental Insurance Total expense Net operating income

Explanation / Answer

Bifuration of Cost & Revenue in PU: Total Units PU Revenue 80000 200.00 400 Expenses: Fixed Variable Wages & Salaries 11800 122.00 Supplies 0 5.00 Equiment Rental 2200 21.00 Insurance 4200 0 Misc. 530 1.50 Puget Sound Drivers Flexible Budget For the Month Ended 31 May Expalantion Revenue 76000 190*400 Expenses: Fixed Variable Wages & Salaries 34980 11800 122.00 11800+(122*190) Supplies 950 0 5.00 (5*190) Equiment Rental 6190 2200 21.00 2200+(21*190) Insurance 4200 4200 0 4200 Misc. 815 530 1.50 530+(1.50*190) Total Expenses 47135 Net Operating Income 28865

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