Exercise 9-10 Planning Budget [LO9-1] Lavage Rapide is a Canadian company that o

Question

Exercise 9-10 Planning Budget [LO9-1]

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 $1,300 per month plus $0.09 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.50 per car washed.

Required:

Prepare the company’s planning budget for August.

Fixed Cost
per Month Cost per
Car Washed Cleaning supplies $ 0.80 Electricity $ 1,300 $ 0.09 Maintenance $ 0.25 Wages and salaries $ 4,900 $ 0.20 Depreciation $ 8,400 Rent $ 2,000 Administrative expenses $ 1,400 $ 0.04

Explanation / Answer

Prepare the company’s planning budget for August.

Planning budget Revenue 53950 Expenses Cleaning supplies 6640 Electricity 2047 Maintenance 2075 Wages and salaries 6560 Depreciation 8400 Rent 2000 Administrative expense 1732 Total expense 29454 Net operating income 24496

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