Question

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:

	Fixed Cost per Month			Cost per Car Washed
Cleaning supplies				$	0.80
Electricity	$	1,400		$	0.08
Maintenance				$	0.30
Wages and salaries	$	4,900		$	0.30
Depreciation	$	8,100
Rent	$	2,200
Administrative expenses	$	1,600		$	0.03

For example, electricity costs are $1,400 per month plus $0.08 per car washed. The company expects to wash 8,000 cars in August and to collect an average of $6.00 per car washed.

Required:

Prepare the company’s planning budget for August.

Answer 1

Answer
Lavage Rapide
Planning budget for August.
Revenue	$     48,000	8000*6
Costs:
Cleaning supplies	$       6,400	8000*0.80
Electricity	$       2,040	(8000*0.08)+1400
Maintenance	$       2,400	8000*0.30
Wages and salaries	$       7,300	(8000*0.30)+4900
Depreciation	$       8,100
Rent	$       2,200
Administrative expenses	$       1,840	(8000*0.03)+1600
Total cost	$     30,280
Profit(Loss)	$     17,720