Pargo Corporation bases its budgets on the activity measure customers served. During May, the company planned to serve 29,000 customers, but actually served 30,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting: Fixed elementper monthVariable element per customerRevenue - $4.30 Wages and salaries$32,700 $1.50 Supplies$0 $0.70 Insurance$7,600 $0.00 Miscellaneous expense$7,100 $0.30 Required:Prepare the company's flexible budget for May based on the actual level of activity for the month.
What will be an ideal response?
| Pargo Corporation | ||
| Flexible Budget | ||
| For the Month Ended May 31 | ||
| Actual customers served (q) | 30,000 | |
| Revenue ($4.30q) | $ | 129,000 |
| Expenses: | ||
| Wages and salaries ($32,700 + $1.50q) | 77,700 | |
| Supplies ($0.70q) | 21,000 | |
| Insurance ($7,600) | 7,600 | |
| Miscellaneous expense ($7,100 + $0.30q) | 16,100 | |
| Total expense | 122,400 | |
| Net operating income | $ | 6,600 |
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