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 $ 1,000 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $ 0.80 $ 0.07 $ 0.25 $ 0.20 $ 4, 100 $ 8,000 $ 2, 100 $ 1,700 $ 0.02 For example, electricity costs are $1,000 per month plus $0.07 per car washed. The company actually washed 8,200 cars in August and collected an average of $6.50 per car washed. Required: Prepare the company's flexible budget for August.

Answer 1

Solution:

Lavage Rapide
Flexible budget
For the month ended August 31
Car Wash	8200
Revenue (8200*$6.50)	$53,300
Expenses:
Cleaning Supplies (8200*$0.80)	$6,560
Electricity ($1000 + 8200*$0.07)	$1,574
Maintenance (8200*$0.25)	$2,050
Wages and salaries ($4100 + 8200*$0.20)	$5,740
Depreciation	$8,000
Rent	$2,100
Administrative Expenses ($1700 + 8200*$0.02)	$1,864
Total Expenses	$27,888
Net Operating Income	$25,412