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

Cost per Car Washed

Cleaning supplies				$	0.80
Electricity	$	1,100		$	0.07
Maintenance				$	0.20
Wages and salaries	$	5,000		$	0.40
Depreciation	$	8,200
Rent	$	2,000
Administrative expenses	$	1,400		$	0.04

For example, electricity costs are $1,100 per month plus $0.07 per car washed. The company actually washed 8,400 cars in August and expects to collect an average of $6.10 per car washed.

Required:

Complete the company’s flexible budget for August.

Answer 1

	Flexible budget
Actual Cars washed	8400
Revenue	51240	=8400*6.10
Expenses:
Cleaning supplies	6720	=8400*0.80
Electricity	1688	=1100+(8400*0.07)
Maintenance	1680	=8400*0.20
Wages and salaries	8360	=5000+(8400*0.40)
Depreciation	8200
Rent	2000
Administrative expenses	1736	=1400+(8400*0.04)
Total expenses	30384
Net operating income	20856