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: Fixed Cost per Month Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed 0.60 0.09 $ 0.15 $0.20 $1,000 $ 4,100 $ 8,300 $ 2,000 $ 1,600 $0.02 For example, electricity costs are $1,000 per month plus $0.09 per car washed. The company actually washed 8,300 cars in August and expects to collect an average of $6.80 per car washed.

Explanation / Answer

Flexible budget :

Revenue (8300*6.8) 56440 Expense Cleaning supplies (8300*.60) 4980 Electricity (8300*.09+1000) 1747 Maintenance (8300*.15) 1245 Wages and salaries (8300*.20+4100) 5760 Depreciation 8300 Rent 2000 Administrative expense (8300*.02+1600) 1766 Total expense 25798 Net operating income 30642

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