Question

avage 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				$	0.50
Electricity	$	1,200		$	0.07
Maintenance				$	0.10
Wages and salaries	$	4,400		$	0.20
Depreciation	$	8,400
Rent	$	2,100
Administrative expenses	$	1,500		$	0.03

For example, electricity costs are $1,200 per month plus $0.07 per car washed. The company actually washed 8,200 cars in August and collected an average of $6.60 per car washed.

Required:

Prepare the company’s flexible budget for August.

Lavage Rapide
Flexible Budget
For the Month Ended August 31
Revenue
Expenses:
Cleaning supplies
Electricity
Maintenance
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense
Net operating income

Answer 1

Prepare the company’s flexible budget for August.

	Lavage Rapide Flexible Budget For the Month Ended August 31 Revenue (8200*6.60) 54120 Expenses: Cleaning supplies (8200*.50) 4100 Electricity (8200*.07+1200) 1774 Maintenance (8200*.10) 820 Wages and salaries (8200*.20+4400) 6040 Depreciation 8400 Rent 2100 Administrative expenses (8200*.03+1500) 1746 Total expense 24980 Net operating income 29140