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				$	0.70
Electricity	$	1,400		$	0.09
Maintenance				$	0.30
Wages and salaries	$	4,700		$	0.40
Depreciation	$	8,200
Rent	$	1,900
Administrative expenses	$	1,700		$	0.02

For example, electricity costs are $1,400 per month plus $0.09 per car washed. The company actually washed 8,400 cars in August and collected an average of $6.60 per car washed.

Required:

Prepare the company’s flexible budget for August.

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				$	0.70
Electricity	$	1,400		$	0.09
Maintenance				$	0.30
Wages and salaries	$	4,700		$	0.40
Depreciation	$	8,200
Rent	$	1,900
Administrative expenses	$	1,700		$	0.02

For example, electricity costs are $1,400 per month plus $0.09 per car washed. The company actually washed 8,400 cars in August and collected an average of $6.60 per car washed.

Required:

Prepare the company’s flexible budget for August.

	Lavage Rapide Flexible Budget For the Month Ended August 31 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense 0 Net operating income $0

Answer 1

Lavage Rapide
Flexible Budget
For the Month Ended August 31
Revenue	$ 55,440.00
Expenses:
Cleaning supplies	$ 5,880.00
Electricity	$ 2,156.00
Maintenance	$ 2,520.00
Wages and salaries	$ 8,060.00
Depreciation	$ 8,200.00
Rent	$ 1,900.00
Administrative expenses	$ 1,868.00
Total expense	$ 30,584.00
Net operating income	$ 24,856.00

Working

Lavage Rapide
Flexible Budget
For the Month Ended August 31
Revenue	=8400 x 6.6
Expenses:
Cleaning supplies	=8400 x 0.7
Electricity	=1400+(8400 x 0.09)
Maintenance	=(8400 x 0.3)
Wages and salaries	=4700+(8400 x 0.4)
Depreciation	8200
Rent	1900
Administrative expenses	=1700+(8400 x 0.02)