Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. The following

Question

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

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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

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Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec

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Archived Solution

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