Question

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:

Fixed Cost per Month

Cost per Car Washed

Cleaning supplies				$	0.80
Electricity	$	1,200		$	0.09
Maintenance				$	0.15
Wages and salaries	$	4,900		$	0.40
Depreciation	$	8,200
Rent	$	1,900
Administrative expenses	$	1,600		$	0.02
For example, electricity costs are $1,200 per month plus $0.09 per car washed. The company actually washed 8,200 cars in August and expects to collect an average of $6.00 per car washed. Required: Complete 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 Net operating income

Answer 1

Answer:

Working

  Revenue = ( 8200 X 6.00 ) = 49200
   Expenses:
      Cleaning supplies = ( 8200 X 0.80) = 6560
      Electricity = (1200+8200 X 0.09) = 1938
      Maintenance = ( 8200 X 0.15) = 1230
      Wages and salaries (4900+8200 X 0.40) = 8180
      Depreciation would remain same as it is fixed cost = 8200
      Rent  would remain same as it is fixed cost = 1900
      Administrative expenses = (1600+8200 X 0.02) = 1764