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) 350
revenue ($420.00q) $ 147,000
expenses:
wages and salaries ($11,500 $130.00q) 57,000
supplies ($4.00q) 1,400
equipment rental ($2,200 $25.00q) 10,950
insurance ($3,900) 3,900
miscellaneous ($510 $1.44q) 1,014
total expense 74,264
net operating income $ 72,736
required:
during may, the company’s actual activity was 340 diving-hours. compute the flexible budget of activity.

operating income 84740.4

Explanation:

The flexible budget will work out the numbers for a level of activity of 340 units

Revenue $420 x 340 = 142,800

Wages and salaries $11,500 fixed component + $130 x 340 =  55,700

Supplies $4.00 x 340 = 1,360

Insurnace (fixed)   $3,900

Miscellaneous $510 fixed component + $1.44 x 340 = 999,6

Operating Income:

Revenues            142,800

total expenses   (58,059.6)  

operating income 84740.4

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