Puget Sound Divers is a company that provides diving service

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:

During May, the company’s activity was actually 290 diving-hours. Complete the following flexible budget for that level of activity. (Round your answers to nearest whole dollar.)

Solution

Solution:

Flexible Budget is a budget prepared by taking the actual activity level achieved but at standard cost/price. It is useful to compare the budget with actual level.

q is taken as actual level of activity i.e. 290 diving hours and all the below calculation is based on standard price given in the question.

Puget Sound Drivers

Flexible Budget

For the Month Ended May 31

Flexible Budget

Revenue ($460*290)

$133,400

Expenses:

Wages and salaries ($11,800 + 128*290)

$48,920

Supplies (6*290)

$1,740

Equipment Rental ($2,500 + $21*290)

$8,590

Insurance ($3,900)

$3,900

Miscellaneous ($530 + 1.44*290)

$948

Total Expense

$64,098

Net Operating Income

$69,302

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