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 carwash facility near Montreal. The following table provides data concerning the company's costs: Cost per Car Washed $0.50 $ 0.09 $0.30 $0.20 Fixed Cost per Month Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $1,100 $4,800 $ 8,100 $1,900 $1,500 0.02 For example, electricity costs are $1,100 per month plus $0.09 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.50 per car washed.

Explanation / Answer

Lavage Rapide Planning Budget For the Month Ended August 31 Revenue (8,200*$6.50) $ 53,300 Expenses: Cleaning supplies (8,200*$0.50) $    4,100 Electricity ($1,100+(8,200*$0.09)) $    1,838 Maintenance (8,200*$0.30) $    2,460 Wages and salaries ($4,800+(8,200*$0.20) $    6,440 Depreciation $    8,100 Rent $    1,900 Administrative expenses ($1,500+(8,200*$0.02) $    1,664 Total expenses $ 26,502 Net operating income $ 26,798

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