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 $1,300 per month plus $0.06 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.30 per car washed.

Required:

Prepare the company’s planning budget for August.

Fixed Cost
per Month Cost per
Car Washed Cleaning supplies $ 0.80 Electricity $ 1,300 $ 0.06 Maintenance $ 0.20 Wages and salaries $ 4,600 $ 0.20 Depreciation $ 8,500 Rent $ 2,200 Administrative expenses $ 1,400 $ 0.03

Explanation / Answer

Prepare the company’s planning budget for August.

Revenue 51660 Expense Cleaning supplies 6560 Electricity 1792 Maintenance 1640 Wages and salaries 6240 Depreciation 8500 Rent 2200 Administrative expenses 1646 Total expense 28578 Net operating income 23082

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