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Homework answers / question archive / Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec
Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. The following table provides data concerning the company's costs: Fixed Cost per Month Cost per Car Washed $1.10 0.50 0.70 0.80 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $2,800 6,100 9,700 3,500 3,200 0.08 The company expects to charge customers an average of $8.20 per car washed. Required: Prepare a flexible budget for October assuming either 8,500 or 9,000 cars are washed.
AUTO LAVAGE INC. Flexible Budget For the Month Ended October 31 Budgeted Amount Per Cars Washed Unit (per car) 8,500 9,000 Variable expenses: Total variable expenses Fixed expenses: Total fixed expenses
| AUTO LAVAGE INC. | |||
| Flexible Budget | |||
| For the Month Ended October 31 | |||
| Budgeted Amount Per Unit | Cars Washed | ||
| (per car) | 8,500 | 9,000 | |
| Sales | $8.20 | (8,500*$8.20)= $69,700 | (9,000*$8.20)= $73,800 |
| Variable expenses: | |||
| Cleaning supplies | 1.10 | (8,500*$1.10)= 9,350 | (9,000*$1.10)= 9,900 |
| Electricity | 0.50 | (8,500*$0.50)= 4,250 | (9,000*$0.50)= 4,500 |
| Maintenance | 0.70 | (8,500*$0.70)= 5,950 | (9,000*$0.70)= 6,300 |
| Wages and salaries | 0.80 | (8,500*$0.80)= 6,800 | (9,000*$0.80)= 7,200 |
| Administrative expenses | 0.08 | (8,500*$0.08)= 680 | (9,000*$0.08)= 720 |
| Total variable expenses | 3.18 | 27,030 | 28,620 |
| Contribution margin | $5.02 | 42,670 | 45,180 |
| Fixed expenses: | |||
| Electricity | 2,800 | 2,800 | |
| Wages and salaries | 6,100 | 6,100 | |
| Depreciation | 9,700 | 9,700 | |
| Rent | 3,500 | 3,500 | |
| Administrative expenses | 3,200 | 3,200 | |
| Total fixed expenses | 25,300 | 25,300 | |
| Net operating income | $17,370 | $19,880 | |
