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 car wash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,400 per month plus $0.10 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.60 per car washed.

Required:

Prepare the company’s planning budget for August.

Fixed Cost
per Month Cost per
Car Washed Cleaning supplies $ 0.70 Electricity $ 1,400 $ 0.10 Maintenance $ 0.20 Wages and salaries $ 4,300 $ 0.40 Depreciation $ 8,000 Rent $ 2,200 Administrative expenses $ 1,800 $ 0.02

Explanation / Answer

The correct answer is :

26,330

Note :

Lavage Rapide Planning Budget For the Month Ended August 31 Revenue 56,100 Expenses: Cleaning supplies 5,950 Electricity 2,250 Maintenance 1,700 Wages and salaries 7,700 Depreciation 8,000 Rent 2,200 Administrative expenses 1,970 Total expense 29,770 Net operating income

26,330

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