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 Cost per per Month Car Washed Cleaning supplies $0.60 Electricity $1,500 $0.09 Maintenance $0.15 Wages and salaries $ 4,300 $0.40 Depreciation $ 8,400 Rent $2,100 Administrative expenses $1,400 $ 0.03 For example, electricity costs are $1,500 per month plus $0.09 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.10 per car washed. Required: Prepare the company's planning budget for August.

Answer 1

Statement showing planning budget for the month of August would be as follows :

Particulars	Amounts ($)
Budgeted CAR washed in August	8,300
Revenue. (8,300*$6.10) (A)	$50,630
Less: Expenses
Cleaning supplies ($0.60*8,300)	$4,980
Electricity ($1,500+8,300*0.09)	$2,247
Maintenace ($0.15*8,300)	$1,245
Wages and salary ($4,300+$0.40*8,300)	$7,620
Depreciation Expenses	$8,400
Rent	$2,100
Administrative Expenses (1,400+0.03*8,300)	$1,649
Total Expenses. (B)	$28,241
Net operating profits (A) - (B)	$22,389