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				$	0.80
Electricity	$	1,200		$	0.06
Maintenance				$	0.30
Wages and salaries	$	4,000		$	0.30
Depreciation	$	8,100
Rent	$	2,100
Administrative expenses	$	1,600		$	0.04

For example, electricity costs are $1,200 per month plus $0.06 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.

	Lavage Rapide Planning Budget For the Month Ended August 31 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income

Answer 1

Lavage Rapide
Planning Budget
For the Month Ended August 31
Revenue	49,800.00
Expenses:
Cleaning supplies	4,980.00
Electricity	1,698.00
Maintenance	2,490.00
Wages and salaries	6,490.00
Depreciation	8,100.00
Rent	2,100.00
Administrative expenses	1,932.00
Total expense	27,790.00
Net operating income	22,010.00