Lavage Rapide is a Canadian company that owns and operates a large automatic car

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:

For example, electricity costs are $1,100 per month plus $0.06 per car washed. The company actually washed 8,300 cars in August and expects to collect an average of $6.90 per car washed.

Complete the company’s flexible budget for August.

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:

For example, electricity costs are $1,100 per month plus $0.06 per car washed. The company actually washed 8,300 cars in August and expects to collect an average of $6.90 per car washed.

Required:

Complete the company’s flexible budget for August.

Cost per Car Washed $0.80 $0.06 $0.15 $0.40 Fixed Cost per Month Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $ 1,100 $ 5,000 $ 8,400 $ 2,100 $ 1,400 $0.03

Explanation / Answer

To compute the value of the flexible budget, multiply the variable cost per unit by the actual production volume.

LAVAGE RAPIDE FLEXIBLE BUDGET FOR THE MONTH ENDED AUGUST 31ST Particulars Computation Amount in $ A Revenue 8300 cars * 6.90 57270 Expenses: Cleaning supplies 8300 cars *0.80 6640 Electricity (Fixed cost :1100)+ 8300 cars*0.06 1598 Maintenance 8300 cars*0.15 1245 Wages and salaries (Fixed cost : 5000) + 8300 cars*0.40 8320 Depreciation Fixed cost 8400 Rent Fixed cost 2100 Administrative expenses (Fixed cost: 1400) +8300 cars*0.03 1649 B Total expense 29952 C Net operating income(A-B) 27318

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