Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.80 Electricity $ 1,200 $ 0.15 Maintenance $ 0.20 Wages and salaries $ 5,000 $ 0.30 Depreciation $ 6,000 Rent $ 8,000 Administrative expenses $ 4,000 $ 0.10 For example, electricity costs should be $1,200 per month plus $0.15 per car washed. The company actually washed 8,800 cars in August and collected an average of $4.90 per car washed. Required: Prepare the company’s flexible budget for August.
Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.80 Electricity $ 1,200 $ 0.15 Maintenance $ 0.20 Wages and salaries $ 5,000 $ 0.30 Depreciation $ 6,000 Rent $ 8,000 Administrative expenses $ 4,000 $ 0.10 For example, electricity costs should be $1,200 per month plus $0.15 per car washed. The company actually washed 8,800 cars in August and collected an average of $4.90 per car washed. Required: Prepare the company’s flexible budget for August.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the company’s costs:
| Fixed Cost per Month |
Cost per Car Washed |
||||
| Cleaning supplies | $ | 0.80 | |||
| Electricity | $ | 1,200 | $ | 0.15 | |
| Maintenance | $ | 0.20 | |||
| Wages and salaries | $ | 5,000 | $ | 0.30 | |
| $ | 6,000 | ||||
| Rent | $ | 8,000 | |||
| Administrative expenses | $ | 4,000 | $ | 0.10 | |
For example, electricity costs should be $1,200 per month plus $0.15 per car washed. The company actually washed 8,800 cars in August and collected an average of $4.90 per car washed.
Required:
Prepare the company’s flexible budget for August.
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