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	$	1,500		$	0.10
Maintenance				$	0.20
Wages and salaries	$	4,300		$	0.20
Depreciation	$	8,300
Rent	$	2,000
Administrative expenses	$	1,300		$	0.02

For example, electricity costs are $1,500 per month plus $0.10 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.60 per car washed.

Required:

Prepare the company’s planning budget for August.

Answer 1

Lavage Rapide
Planning Budget
For the Month Ended August 31
					Total Amount
a	Revenue				$            53,460
b	Expenses
	Cleaning Supplies				$              5,670
	Electricity				$              2,310
	Maintenance				$              1,620
	Wages and Salaries				$              5,920
	Depreciation				$              8,300
	Rent				$              2,000
	Administrative Expenses				$              1,462
	Total expense				$            27,282
c	Net Operating Income (a-b)				$            26,178

Calculations
			No. of Car washed	Variable element per car washed	Total Amount
a	Revenue		8,100	6.60	$            53,460
b	Expenses
	Cleaning Supplies		8,100	0.70	$              5,670
	Electricity
	Fixed				$              1,500
	Variable		8,100	0.10	$                  810
	Total Electricity expense				$              2,310
	Maintenance		8,100	0.20	$              1,620
	Wages and Salaries
	Fixed				$              4,300
	Variable		8,100	0.20	$              1,620
	Total Wages and Salaries				$              5,920
	Depreciation				$              8,300
	Rent				$              2,000
	Administrative Expenses
	Fixed				$              1,300
	Variable		8,100	0.02	$                  162
	Total Administrative Expenses				$              1,462

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