FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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
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.

Prepare the company’s planning budget for August.

Expert Solution
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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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