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				$	0.70
Electricity	$	1,100		$	0.06
Maintenance				$	0.25
Wages and salaries	$	4,400		$	0.40
Depreciation	$	8,300
Rent	$	1,800
Administrative expenses	$	1,300		$	0.01

For example, electricity costs are $1,100 per month plus $0.06 per car washed. The company actually washed 8,200 cars in August and collected an average of $6.50 per car washed.

Required:

Prepare the company’s flexible budget for August.

Answer 1

Answer:-

Lavage Rapide
Flexible Budget
For the month ended August 31
Particulars		Amount
		$
Revenue	8200 cars*$6.50 per car washed	53300
Less:-Expenses
Cleaning supplies	8200 cars*$.70 per car washed	5740
Electricity Variable	8200 cars*$.06 per car washed	492
Electricity Fixed		1100
Maintenance Variable	8200 cars*$.25 per car washed	2050
Wages & Salaries Variable	8200 cars*$.40 per car washed	3280
Wages & Salaries Fixed		4400
Depreciation Fixed		8300
Rent Fixed		1800
Administrative expenses Variable	8200 cars*$.01 per car washed	82
Administrative expenses Fixed		1300
Net Opreating income		24756