Puget Sound Divers is a company that provides diving services such as underwater ship repairs to clients in the Puget Sound area. The companys planning budget for May appears below:

Puget Sound Divers

Planning Budget

For the Month Ended May 31

Budgeted diving-hours (q)

100

Revenue ($365.00q)

$ 36,500

Expenses:

Wages and salaries ($8,000 + $125.00q)

20,500

Supplies ($3.00q)

300

Equipment rental ($1,800 + $32.00q)

5,000

Insurance ($3,400)

3,400

Miscellaneous ($630 + $1.80q)

810

Total expense

30,010

Net operating income

$ 6,490

During May, the companys actual activity was 105 diving-hours.

Required:

Prepare a flexible budget for May.

Puget Sound Divers

Flexible Budget

For the Month Ended May 31

Revenue

Expenses:

Wages and salaries

Supplies

Equipment rental

Insurance

Miscellaneous

Total expense

Net operating income

During May, the company's actual activity was 105 diving-hours. Aequired: Prepare a flexble budget for May