Lavage Rapide is a Canadian company that owns and operates a large automatic car

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:

For example, electricity costs are $1,000 per month plus $0.09 per car washed. The company actually washed 8,500 cars in August and collected an average of $6.70 per car washed.

Required:

Prepare the company’s flexible budget for August.

Fixed Cost
per Month Cost per
Car Washed Cleaning supplies $ 0.70 Electricity $ 1,000 $ 0.09 Maintenance $ 0.20 Wages and salaries $ 4,400 $ 0.30 Depreciation $ 8,300 Rent $ 2,000 Administrative expenses $ 1,400 $ 0.01

Explanation / Answer

Flexible budget :

Revenue 56950 expenses Cleaning supplies 5950 Electricity 1765 Maintenance 1700 Wages and salaries 6950 Depreciation 8300 Rent 2000 Administrative expense 1485 Total expense 28150 Net operating income 28800

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