Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.70 Electricity $ 1,100 $ 0.09 Maintenance $ 0.15 Wages and salaries $ 4,000 $ 0.20 Depreciation $ 8,200 Rent $ 1,900 Administrative expenses $ 1,700 $ 0.02 For example, electricity costs should be $1,100 per month plus $0.09 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.50 per car washed.
Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.70 Electricity $ 1,100 $ 0.09 Maintenance $ 0.15 Wages and salaries $ 4,000 $ 0.20 Depreciation $ 8,200 Rent $ 1,900 Administrative expenses $ 1,700 $ 0.02 For example, electricity costs should be $1,100 per month plus $0.09 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.50 per car washed.
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 | $ 0.70 | |
| Electricity | $ 1,100 | $ 0.09 |
| Maintenance | $ 0.15 | |
| Wages and salaries | $ 4,000 | $ 0.20 |
| $ 8,200 | ||
| Rent | $ 1,900 | |
| Administrative expenses | $ 1,700 | $ 0.02 |
For example, electricity costs should be $1,100 per month plus $0.09 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.50 per car washed.
Prepare the company’s planning budget for August.
Expert Solution
Step 1
Planning budget is based on Budgeted level of activity volume. It includes revenues and costs based Budgeted rate and costs foe each item at budgeted level of activity.
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