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 $ 0.50 $ 0.08 $ 0.20 $ 0.20 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $1,400 $4,700 $8,000 $1,900 $1,600 $ 0.03 For example, electricity costs are $1,400 per month plus $0.08 per car washed. The company actually washed 8,200 cars in August and collected an average of $6.70 per car washed. Required: Prepare the company's flexible budget for August.

Answer 1

Answer

	Flexible Budget
Actual Cars washed	8,200
Revenues	$             54,940.00
Expenses:
Cleaning Supplies	$               4,100.00
Electricity	$               2,056.00
Maintenance	$               1,640.00
Wages & Salaries	$               6,340.00
Depreciation	$               8,000.00
Rent	$               1,900.00
Administrative expense	$               1,846.00
Total Expenses	$             25,882.00
Net Operating Income	$             29,058.00

--Working

		WORKING COLUMNS				Flexible Budget
Cars washed						8,200
Revenues				$      6.70		$             54,940.00
Expenses:
Cleaning Supplies	(	$                      -	)	$      0.50	x 8200	$               4,100.00
Electricity	(	$         1,400.00	)	$      0.08	x 8200	$               2,056.00
Maintenance	(	$                      -	+	$      0.20	x 8200	$               1,640.00
Wages & Salaries	(	$         4,700.00	+	$      0.20	x 8200	$               6,340.00
Depreciation	(	$         8,000.00	+	$           -	x 8200	$               8,000.00
Rent	(	$         1,900.00	)	$           -	x 8200	$               1,900.00
Administrative expense	(	$         1,600.00	+	$      0.03	x 8200	$               1,846.00
Total Expenses		$      17,600.00		$      1.01		$             25,882.00
Net Operating Income						$             29,058.00