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oee [108]
3 years ago
8

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) 250
Revenue ($440.00q) $ 110,000
Expenses:
Wages and salaries ($11,800 + $128.00q) 43,800
Supplies ($3.00q) 750
Equipment rental ($2,100 + $22.00q) 7,600
Insurance ($4,000) 4,000
Miscellaneous ($530 + $1.48q) 900
Total expense 57,050
Net operating income $ 52,950

During May, the company’s activity was actually 240 diving-hours. Prepare flexible budget for that level of activity.
Business
2 answers:
konstantin123 [22]3 years ago
6 0

Answer:

See the explanation below:

Explanation:

A flexible budget is a budget that changes as the level or volume of activity change.

From the question, the actual q is now equal to 240. We simply substitute 240 for q wherever we see q and proceed as follows:

Puget Sound Divers

Flexible Budget for the Month Ended May 31

                                                                       $                        $

Budgeted diving-hours (q) 240

Revenue ($440.00q)                                                            105,600.00

Expenses:

Wages and salaries ($11,800 + $128.00q)      42,520

Supplies ($3.00q)                                                   720

Equipment rental ($2,100 + $22.00q)                7,380

Insurance ($4,000)                                              4,000

Miscellaneous ($530 + $1.48q)                     <u>    885.20 </u>

Total expense                                                                         (<u>55,505.20) </u>

Net operating income                                                            <u>50,094.80 </u>

Therefore, due a fall in the activity level to 240 diving hours, net operating income fell from the budgeted $52,950 to $50,094.80.

notsponge [240]3 years ago
3 0

Answer:

$50,094.8

Explanation:

Flexible Budget are budget prepared by taking the actual activity level achieved at standard cost/price. WHILE

q is taken as the actual level of activity which is 240 diving hours.

Puget Sound Divers

Flexible Budget For the Month Ended May 31

Revenue ($440.00 ×240) $105,600

Expenses:

Wages and salaries ($11,800 + $128.00×240) $42,520

Supplies ($3.00 ×240) $720

Equipment rental ($2,100 + $22.00 ×240) $7,380

Insurance ($4,000) $4,000

Miscellaneous ($530 + $1.48×240) $885.2

Total expense $55,505.2

Net operating income ($105,600- $55,505.2) $ 50,094.8

Net operating income =Revenue - Total expenses

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