Exercise 8-8 Flexible Budget [LO8-1] Lavage Rapide is a Canadian company that ow

Question

Exercise 8-8 Flexible Budget [LO8-1] 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 $ 0.15 Maintenance $ 0.20 Wages and salaries $ 5,000 $ 0.30 Depreciation $ 6,000 Rent $ 8,000 Administrative expenses $ 4,000 $ 0.10 For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company actually washed 8,800 cars in August and expects to collect an average of $4.90 per car washed. Required: Complete the company’s flexible budget for August.

Explanation / Answer

Company's Planning budget for August.

Lavage Rapide

Planning Budget

For the Month Ended August 31

Note: workings have been provided simultaneously

Revenue (8,800* $4.90) $43,120 Expenses: Cleaning expenses (8,800*$0.80) $7,040 Electricity ($1,200 + (8,800*0.15)) $2,520 Maintenance ($0.20*8,800) $1,760 Wages and salaries ($5,000 + (0.30*$8,800)) $7,640 Depreciation $6,000 Rent $8,000 Administrative expenses ($4,000 + (0.10 * 8,800)) $4,880 Total expense $37,840 Net operating income $5,280

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