Question

Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs: Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.60 Electricity $ 1,200 $ 0.07 Maintenance $ 0.15 Wages and salaries $ 4,700 $ 0.40 Depreciation $ 8,000 Rent $ 2,000 Administrative expenses $ 1,800 $ 0.04 For example, electricity costs are $1,200 per month plus $0.07 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.00 per car washed. Required: Prepare the company’s planning budget for August.

Answer 1

Lavage Rapide
Planning Budget
For the month ended August 31
Budgeted car wash	8300
Revenue ( 8300 * 6.00 )	49800
Expenses :
Cleaning supplies ( 8300 * 0.60 )	4980
Electricity [ 1200 + ( 8300 * 0.07 ) ]	1781
Maintenance ( 8300 * 0.15 )	1245
Wages and salaries [ 4700 + ( 8300 * 0.40 ) ]	8020
Depreciation	8000
Rent	2000
Administrative expenses [ 1800 + ( 8300 * 0.04 ) ]	2132
Total expense	28158
Net operating income	21642