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  

$

0.60     

  Electricity  

$

1,500     

$

0.08     

  Maintenance  

$

0.25     

  Wages and salaries  

$

4,900     

$

0.20     

  Depreciation  

$

8,100     

  Rent  

$

2,000     

  Administrative expenses  

$

1,500     

$

0.05     

For example, electricity costs are $1,500 per month plus $0.08 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.70 per car washed.

Required:

Complete the company’s planning budget for August.

Lavage Rapide
Planning Budget
For the Month Ended August 31
Revenue
Expenses:
Cleaning supplies
Electricity
Maintenance
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense	0
Net operating income	$0

Answer 1

Solution:

Lavage Rapide
Planning Budget
For the Month Ended August 31
Revenue (8100 Cars * $6.70)	$54,270
Expenses:
Cleaning Supplies (0.60*8100)	$4,860
Electricity (1500 + 8100*0.08)	$2,148
Maintenance (8100*0.25)	2025
Wages and salaries (4900 + 8100*0.20)	6520
Depreciation	8100
Rent	2000
Administrative expenses (1500 + 0.05*8100)	1905
Total expense	$27,558
Net operating income	$26,712

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you